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Asymmetric price transmission in the Hungarian retail electricity market

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  • Szőke, Tamás
  • Hortay, Olivér
  • Balogh, Eszter

Abstract

The article compares the market power of Hungarian electricity traders during the partially liberalised transitional market model from 2004 to 2008 and the fully liberalised period lasting since 2008. In our empirical work, we use an econometric modelling technique based on asymmetric price transmission (APT) theory to measure the market power of traders in the electricity market. The aim of our work is to conduct a quantitative analysis of the Hungarian electricity trading market by applying the APT modelling technique – used widely in agro-economic analyses – to electricity markets. The intuition behind the method is the assumption that asymmetric price transmission refers to deviations from perfect competition. The research has found that different regulation regimes lead to different patterns of asymmetry in price transmission and the results underline that the market position of electricity traders have improved since the introduction of the liberalised market model. By mapping the results of the APT model to the actual policy and market changes we argue that the APT method is a useful tool for analysing the competition on electricity markets.

Suggested Citation

  • Szőke, Tamás & Hortay, Olivér & Balogh, Eszter, 2019. "Asymmetric price transmission in the Hungarian retail electricity market," Energy Policy, Elsevier, vol. 133(C).
    • Handle: RePEc:eee:enepol:v:133:y:2019:i:c:s0301421519304574
    DOI: 10.1016/j.enpol.2019.110879
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    Cited by:

    1. Correa-Giraldo, Manuel & Garcia-Rendon, John J. & Perez, Alex, 2021. "Strategic behaviors and transfer of wholesale costs to retail prices in the electricity market: Evidence from Colombia," Energy Economics, Elsevier, vol. 99(C).
    2. Halkos, George, 2020. "Examining the level of competition in the energy sector," MPRA Paper 98343, University Library of Munich, Germany.
    3. Szőke, Tamás & Hortay, Olivér & Farkas, Richárd, 2021. "Price regulation and supplier margins in the Hungarian electricity markets," Energy Economics, Elsevier, vol. 94(C).
    4. Przemysław Kaszyński & Aleksandra Komorowska & Jacek Kamiński, 2023. "Revisiting Market Power in the Polish Power System," Energies, MDPI, vol. 16(13), pages 1-23, June.
    5. Ying, Zhou & Xin-gang, Zhao & Xue-feng, Jia & Zhen, Wang, 2021. "Can the Renewable Portfolio Standards improve social welfare in China's electricity market？," Energy Policy, Elsevier, vol. 152(C).
    6. András Szeberényi & Ferenc Bakó, 2023. "Electricity Market Dynamics and Regional Interdependence in the Face of Pandemic Restrictions and the Russian–Ukrainian Conflict," Energies, MDPI, vol. 16(18), pages 1-22, September.
    7. Yongxiu He & Meiyan Wang & Fengtao Guang, 2019. "Applicability Evaluation of China’s Retail Electricity Price Package Combining Data Envelopment Analysis and a Cloud Model," Energies, MDPI, vol. 13(1), pages 1-21, December.

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    More about this item

    Keywords

    Market power; Vertical integration; Electricity; Price transmission; Econometrics; Hungary;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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