American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Efficient Retail Pricing in Electricity and Natural Gas Markets
American Economic Review
vol. 103,
no. 3, May 2013
(pp. 350–55)
Abstract
A long line of research investigates whether the retail prices of electricity and natural gas send proper signals about scarcity in order to induce efficient consumption. Historically, regulated utilities have not designed tariffs that set marginal prices equal to marginal costs. Currently, some jurisdictions are opening the retail sectors to competition via "retail choice." These new regimes replace imperfect regulation with imperfect competition as the process by which retail tariffs are formed. We discuss the challenges in evaluating the efficiency of tariffs and present evidence of how pricing has changed in markets with retail choice.Citation
Puller, Steven L., and Jeremy West. 2013. "Efficient Retail Pricing in Electricity and Natural Gas Markets." American Economic Review, 103 (3): 350–55. DOI: 10.1257/aer.103.3.350Additional Materials
JEL Classification
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L94 Electric Utilities
- L95 Gas Utilities; Pipelines; Water Utilities
- L98 Industry Studies: Utilities and Transportation: Government Policy
- Q41 Energy: Demand and Supply