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The Gas Price Brake Increases Gas Prices: Empirical Evidence

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  • Brunninger, Lukas
  • Dertwinkel-Kalt, Markus
  • Gugler, Klaus
  • Heim, Sven

Abstract

In the aftermath of the Russian invasion in Ukraine and rising gas prices, the “gas Price brake” was implemented in Germany. We employ a difference-in-differences Approach and analyze data on offered gas contracts from two countries with comparable gas markets, where one country (Germany) has implemented the gas price brake and the other (Austria) has not. Our findings support the theoretical prediction, indicating that the gas price brake led to an increase in total annual gas costs in Germany. This increase is entirely attributable to incumbents increasing counterfactual gas prices by up to 90%. Non-incumbents do not ’milk‘ the brake.

Suggested Citation

  • Brunninger, Lukas & Dertwinkel-Kalt, Markus & Gugler, Klaus & Heim, Sven, 2024. "The Gas Price Brake Increases Gas Prices: Empirical Evidence," Department of Economics Working Paper Series 372, WU Vienna University of Economics and Business.
    • Handle: RePEc:wiw:wus005:68240794
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    More about this item

    Keywords

    Energy Policy; Gas Price Brake; Moral Hazard; Incumbents;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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