How Far Does Economic Theory Explain Competitive Nonlinear Pricing in Practice?
S. W. Davies
University of East Anglia (UEA)
Catherine Waddams Price
University of East Anglia (UEA) - School of Management
Chris M. Wilson
June 25, 2009
ESRC Centre for Competition Policy Working Paper Series (CCP Working Paper 09-7)
Liberalisation of the British electricity market, in which previously monopolised regional markets were exposed to large-scale entry, is used to test the propositions of several recent theoretical papers on oligopolistic nonlinear pricing. Consistent with those theories, each oligopolist offered a single two-part electricity tariff, and a lump sum discount to consumers who purchased both electricity and gas. However, inconsistent with those theories, firms’ two-part tariffs are heterogeneous in ways that cannot be attributed to cost. We establish a series of stylised facts about the nature of these asymmetries between firms and use them to confront established theory.
Number of Pages in PDF File: 35
Keywords: oligopolistic nonlinear pricing, two-part tariffs, asymmetric equilibria, retail electricity, collusion
JEL Classification: D43, L43, L94working papers series
Date posted: June 29, 2009
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo5 in 0.688 seconds