The Impact of Behavioral and Structural Remedies on Electricity Prices: The Case of the England and Wales Electricity Market

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F68407700%3A21230%2F18%3A00327557" target="_blank" >RIV/68407700:21230/18:00327557 - isvavai.cz</a>

Result on the web

<a href="https://www.mdpi.com/1996-1073/11/12/3420" target="_blank" >https://www.mdpi.com/1996-1073/11/12/3420</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.3390/en11123420" target="_blank" >10.3390/en11123420</a>

Result language

angličtina

Original language name

The Impact of Behavioral and Structural Remedies on Electricity Prices: The Case of the England and Wales Electricity Market

Original language description

During the liberalization process the UK regulatory authority introduced a behavioral remedy (through price-cap regulation) and structural remedy (through divestment series) in order to mitigate an exercise of market power and lower the influence of incumbent producers on wholesale electricity prices. We study the impact of these remedies on the dynamics of the wholesale electricity price during the peak-demand period over trading days. An extended autoregressive and autoregressive conditional heteroscedasticity (AR–ARCH) model with a novel skew generalized error distribution is used. This distribution allows one to capture the features of asymmetry, excess kurtosis, and heavy tails. The model is extended to include individual incumbent producers’ market shares and other explanatory variables reflecting seasonal patterns and regulatory regimes. We find that the structural remedy was more successful than the behavioral remedy because the effect of market share of the previously larger incumbent producer on the wholesale price is statistically insignificant. Moreover, after the second series of divestments, price volatility reduced.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

50202 - Applied Economics, Econometrics

Project

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Continuities

V - Vyzkumna aktivita podporovana z jinych verejnych zdroju

Publication year

2018

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

ENERGIES

ISSN

1996-1073

e-ISSN

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Volume of the periodical

11

Issue of the periodical within the volume

12

Country of publishing house

CH - SWITZERLAND

Number of pages

24

Pages from-to

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UT code for WoS article

000455358300181

EID of the result in the Scopus database

2-s2.0-85059252387