Quotation Gugler, Klaus, Liebensteiner, Mario, Schmitt, Stephan. 2015. Vertical Disintegration in the European Electricity Sector: Empirical Evidence on Lost Synergies. Department of Economics Working Paper Series.


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Abstract

The EU has been promoting unbundling of the transmission grid from other stages of the electricity supply chain with the aim of fostering competition in the upstream stage of electricity generation. At presence, ownership unbundling is the predominant form of unbundling in Europe. However, the benefits of increased competition from ownership unbundling of the transmission grid may come at the cost of lost vertical synergies between the formerly integrated stages of electricity supply. The policy debate generally neglects such potential costs of unbundling, yet concentrates on its benefits. Therefore European cross-country evidence may shed some light on this issue. This study helps fill this void by empirically estimating the magnitude of economies of vertical integration (EVI) between electricity generation and transmission based on a quadratic cost function. For this purpose we employ novel firm-level panel data of major European electricity utilities. Our results confirm the presence of substantial EVI, which put the policy measure of transmission ownership unbundling into question

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title Vertical Disintegration in the European Electricity Sector: Empirical Evidence on Lost Synergies
Title of whole publication Department of Economics Working Paper Series
Year 2015
URL http://epub.wu.ac.at/4360/

Associations

People
Gugler, Klaus (Details)
Liebensteiner, Mario (Former researcher)
External
Schmitt, Stephan
Organization
Research Institute for Regulatory Economics FI (Details)
Institute for Quantitative Economics IN (Details)
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