The Benefits of Competition in Regulated Energy Retail Markets
Published 9 November 2022
Abstract
A successful process of deregulation and liberalization in regulated energy retail markets is one which sets the basis to maximize general well-being. However, the lack of specific experience regarding its impact hinders the way in which success can be defined. Deregulation processes of electricity and natural gas energy retail markets were based on the aspiration that the benefits of competition would materialize in different dimensions: for example, higher quality of service, greater efficiency, lower price, and greater variety of products. Competition These benefits can only be achieved if the conditions necessary for the process success are met. Competition by itself can help improve the social well-being in energy retail markets but won’t be completely effective unless these requirements are fully met. Striking the right implementation steps lies at the heart of this process. Lessons learnt from experience show that the main requirements for success are associated with both supply and demand issues. In this paper we set a brief theoretical framework to think how to analyze the convenience of introducing competition, we briefly summarize its benefits and the empirical evidence supporting them, and we present important preconditions for these benefits to arise.
This paper will be part of the OGEL Special Issue on "Energy Market Creation: Liberalisations and Transformations". More information here www.ogel.org/news.asp?key=716