Competition in Retail Electricity Markets: An Assessment of Ten Year Dutch Experience

TILEC Discussion Paper No. 2016-011

CentER Discussion Paper No. 2016-022

36 Pages Posted: 17 Jun 2016 Last revised: 29 Jun 2016

See all articles by Machiel Mulder

Machiel Mulder

Centre for Energy Economics Research, University of Groningen

Bert Willems

Tilburg University - Department of Economics - CentER & TILEC; University of Toulouse 1 - Toulouse School of Economics (TSE)

Date Written: June 15, 2016

Abstract

This paper examines a decade of retail competition in the Dutch electricity market and discusses market structure, regulation, and market performance. We find a proliferation of product variety, in particular by the introduction of quality-differentiated green-energy products. Product innovation could be a sign of a well-functioning market that caters to customer’s preferences, but it can also indicate a strategic product differentiation to soften price competition. Although slightly downward trending, gross retail margins remain relatively high, especially for green products. Price dispersion across retailers for identical products remains high, as also across products for a single retailer. We do not find evidence of asymmetric pass-through of wholesale costs. Overall, the retail market matured as evidenced by fewer consumer complaints and higher switching rates. A fairly intensive regulation of mature energy retail markets appears to be needed to create benefits for consumers.

Keywords: retail electricity market, competition, regulation, ex-post assessment

JEL Classification: L94, L43, L11

Suggested Citation

Mulder, Machiel and Willems, Bert, Competition in Retail Electricity Markets: An Assessment of Ten Year Dutch Experience (June 15, 2016). TILEC Discussion Paper No. 2016-011, CentER Discussion Paper No. 2016-022, Available at SSRN: https://ssrn.com/abstract=2796043 or http://dx.doi.org/10.2139/ssrn.2796043

Machiel Mulder

Centre for Energy Economics Research, University of Groningen ( email )

Postbus 72
9700 AB Groningen
Netherlands

Bert Willems (Contact Author)

Tilburg University - Department of Economics - CentER & TILEC ( email )

P.O. Box 90153 Room K308
Tilburg, 5000LE
Netherlands
+31134662588 (Phone)

HOME PAGE: http://www.bertwillems.com

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

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