Interdependencies between Countries in the Provision of Energy

28 Pages Posted: 24 Feb 2021

See all articles by Doina Radulescu

Doina Radulescu

University of Bern

Philippe Sulger

Swiss Competition Commission

Date Written: 2021

Abstract

Many economies are concerned with the future security of electricity supply. This is rooted in the necessity to decarbonise energy systems and in the nuclear phase-out. Hence, some economies, instead of investing in own domestic energy capacity, rely on energy production by their neighbours. At the same time, countries claim to drastically cut back their fossil fuel energy production. Yet, they increasingly depend on fossil fuel energy imports from abroad. To analyse these interdependencies we employ data for 17 European countries from 1978 to 2017. We first examine how countries respond to changes in energy capacity investment by countries in the vicinity. Using spatial econometric models we find a negative relationship between countries’ investment in energy capacities. Second, we use fixed effects and instrumental variable estimators as well as an event study framework to analyse the link between domestic fossil energy production and imports. Our results reveal that a decline in domestic fossil energy production is associated with increasing fossil energy imports, suggesting that countries partially substitute one for the other.

JEL Classification: C210, H540, H770, Q410

Suggested Citation

Radulescu, Doina and Sulger, Philippe, Interdependencies between Countries in the Provision of Energy (2021). CESifo Working Paper No. 8896, Available at SSRN: https://ssrn.com/abstract=3791865

Doina Radulescu (Contact Author)

University of Bern ( email )

Gesellschaftsstrasse 49
Bern, BERN 3001
Switzerland

Philippe Sulger

Swiss Competition Commission ( email )

Monbijoustrasse 43
Bern, 3003
Switzerland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
9
Abstract Views
78
PlumX Metrics