Quotation Gugler, Klaus, Haxhimusa, Adhurim. 2016. Cross-Border Technology Differences and Trade Barriers: Evidence from German and French Electricity Markets.


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Abstract

Using hourly data, we show that the convergence of German and French electricity spot prices depends on the employed generation mix structure, on the trade (export/import) capacity between the two countries, and on characteristics of neighbouring markets. Only when German and French electricity markets employ "similar" generation mixes price spreads vanish, and the likelihood for congestion of electricity flows is significantly reduced. This implies that, at least, a part of the convergence that was documented in recent literature is spurious, because it is not (only) driven by the forces of arbitrage, but by the similarity of the Generation structures. The direction of congestion matters in this regard. Furthermore, we document consistent evidence for the most important predictions of trade theory if markets are characterized by increasing marginal cost (i.e. supply) curves and limited cross-border capacities.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title Cross-Border Technology Differences and Trade Barriers: Evidence from German and French Electricity Markets
Year 2016
URL http://epub.wu.ac.at/5222/
JEL D47, F15, L81, L98, Q42, Q48

Associations

People
Gugler, Klaus (Details)
Haxhimusa, Adhurim (Former researcher)
Organization
Research Institute for Regulatory Economics FI (Details)
Research areas (Ă–STAT Classification 'Statistik Austria')
2906 Power industry (Details)
5370 Industrial economics (Details)
5372 Regulatory economics (Details)
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