Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148001
Authors: 
Duso, Tomaso
Szücs, Florian
Year of Publication: 
2016
Series/Report no.: 
DIW Discussion Papers 1614
Abstract: 
We analyze the pass-through of cost changes to retail tariffs in the German electricity market over the 2007 to 2014 period. We find an average pass-through rate of around 60%, which significantly varies with demand factors: while the pass-through rate to baseline tariffs, where firms have higher market power, is only 50%, it increases to 70% in the competitive segment of the market. Although the pass-through rate of independent firms is significantly higher than that of other firms in the competitive market segment, the extent of supply-side heterogeneity is limited. Thus, the firms' ability to exercise market power appears to be constrained by competition and largely determined by demand side factors. Finally, we find that the pass-through rate in the competitive market segment has been approaching unity over the past years, indicating a rise in competitive pressure.
Subjects: 
electricity retail
pass-through
Germany
JEL: 
C23
D22
D43
L13
L94
Q41
Document Type: 
Working Paper

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