Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323872 
Year of Publication: 
2025
Citation: 
[Journal:] The RAND Journal of Economics [ISSN:] 1756-2171 [Volume:] 56 [Issue:] 2 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2025 [Pages:] 129-144
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
To help households and firms with exploding energy costs in the aftermath of the Ukraine war, a new policy called the “energy price brake” was implemented. A unique feature of this relief measure is that it provides a transfer that increases in the consumer's contractual per‐unit price of energy. In a formal model, we show that this policy creates incentives for moral hazard of energy providers to raise per‐unit prices. Whereas this moral hazard problem increases the policy's fiscal costs, it also reinforces energy savings. Whether the policy's main beneficiaries are consumers or firms depends on the market structure.
Subjects: 
energy crisis
energy price brake
energy price policies
energy saving
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article
Document Version: 
Published Version

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