HUI Working Papers, HUI Research
Pricing in the Swedish Retail Market for Electricity
Abstract: In 1996, the Swedish energy market was deregulated, and
one of the changes was that after the deregulation, the consumer can now
choose electricity retailer in the Swedish market. This, however, raises
the question of how retailers and consumers have handled the transition
from local monopolies to a national market for retail electricity in
Sweden. Has the extent of the market changed from the municipality to the
nation as wanted by the regulators or not? The results presented in this
paper indicate that there are some market imperfections remaining, at least
for fixed price contracts, and that price movements for such contracts are
not fully parallel as would be the case if the law of one price would hold.
However, the size of the market imperfection seem to be quite small, as the
price difference between the dominant firms in the market and the
day-by-day lowest price offered indicate that the consumer could save on
average 5.21 öre per Kwh if always being able to patronize the lowest price
contract in the market. For a Swedish household consuming 20 000 Kwh, the
savings of always having the cheapest contract would then imply a yearly
saving of approximately 1000 SEK per year.
Keywords: energy market regulation; energy market competition; law of one price; (follow links to similar papers)
JEL-Codes: D04; D22; D40; L13; Q41; (follow links to similar papers)
16 pages, August 17, 2015
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