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Allocative efficiency, potential cost savings, and power supply price markdown in Korean electric power sector

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  • Myunghun Lee

Abstract

As one publicly owned company monopolizes the electricity supply, Korea’s power market has been distorted. Firms faced with constraints imposed by a regulatory environment are likely to fail to minimize their production costs subject to market prices. In this paper, we test for allocative efficiency of fuel inputs for the Korean electric power industry over the period of 1990–2015. The potential cost savings and maximum power supply price markdown are calculated by imposing allocative efficiency. The power plants, on average, could have reduced their fuel costs by as much as 22.1% annually. The attainment of allocative efficiency would have enabled the power supply price to be cut by 7.6% annually.

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  • Myunghun Lee, 2019. "Allocative efficiency, potential cost savings, and power supply price markdown in Korean electric power sector," Energy & Environment, , vol. 30(4), pages 617-628, June.
    • Handle: RePEc:sae:engenv:v:30:y:2019:i:4:p:617-628
    DOI: 10.1177/0958305X18802767
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    Cited by:

    1. Dong-Hyun Oh & JongWuk Ahn & Sinwoo Lee & Hyundo Choi, 2021. "Measuring technical inefficiency and CO2 shadow price of Korean fossil-fuel generation companies using deterministic and stochastic approaches," Energy & Environment, , vol. 32(3), pages 403-423, May.

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