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Efficient Retail Pricing in Electricity and Natural Gas Markets

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  • Puller, Steven L
  • West, Jeremy

Abstract

A long line of research investigates whether the retail prices of electricity and natural gas send proper signals about scarcity in order to induce efficient consumption. Historically, regulated utilities have not designed tariffs that set marginal prices equal to marginal costs. Currently, some jurisdictions are opening the retail sectors to competition via “retail choice.” These new regimes replace imperfect regulation with imperfect competition as the process by which retail tariffs are formed. We discuss the challenges in evaluating the efficiency of tariffs and present evidence of how pricing has changed in markets with retail choice.

Suggested Citation

  • Puller, Steven L & West, Jeremy, 2013. "Efficient Retail Pricing in Electricity and Natural Gas Markets," Santa Cruz Department of Economics, Working Paper Series qt20j4s847, Department of Economics, UC Santa Cruz.
    • Handle: RePEc:cdl:ucscec:qt20j4s847
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    References listed on IDEAS

    as
    1. Paul Joskow & Jean Tirole, 2006. "Retail electricity competition," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 799-815, December.
    2. Paul Joskow & Jean Tirole, 2006. "Retail electricity competition," RAND Journal of Economics, The RAND Corporation, vol. 37(4), pages 799-815, December.
    3. Monica Giulietti & Catherine Waddams Price & Michael Waterson, 2005. "Consumer Choice and Competition Policy: a Study of UK Energy Markets," Economic Journal, Royal Economic Society, vol. 115(506), pages 949-968, October.
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