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Efficient Retail Pricing in Electricity and Natural Gas Markets

American Economic Review Papers and Proceedings, Forthcoming

12 Pages Posted: 14 Feb 2013  

Steven L. Puller

Texas A&M University - Department of Economics; National Bureau of Economic Research (NBER)

Jeremy West

Texas A&M University - Department of Economics

Date Written: January 16, 2013

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.

Keywords: electricity, markets, deregulation, retail choice, tariff functions

JEL Classification: L11, Q41, Q48

Suggested Citation

Puller, Steven L. and West, Jeremy, Efficient Retail Pricing in Electricity and Natural Gas Markets (January 16, 2013). American Economic Review Papers and Proceedings, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2203174

Steven Lawrence Puller (Contact Author)

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jeremy West

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

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