2014/10/01 by Klaus Gugler, Gugler, Klaus, Mario Liebensteiner +3
Economics, Econometrics and Finance · Engineering · #Electric Power System Optimization #Merger and Competition Analysis
paper · pdf · doi:10.57938/b1df9586-cf6b-48a3-8f43-e866fbe328c0
openalex publication_date 2014/10/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
The EU has been promoting unbundling of the transmission grid from other stages <br/>of the electricity supply chain with the aim of fostering competition in the upstream stage of <br/>electricity generation. At presence, ownership unbundling is the predominant form of <br/>unbundling in Europe. However, the benefits of increased competition from ownership <br/>unbundling of the transmission grid may come at the cost of lost vertical synergies between the <br/>formerly integrated stages of electricity supply. The policy debate generally neglects such <br/>potential costs of unbundling, yet concentrates on its benefits. Therefore European crosscountry <br/>evidence may shed some light on this issue. This study helps fill this void by <br/>empirically estimating the magnitude of economies of vertical integration (EVI) between <br/>electricity generation and transmission based on a quadratic cost function. For this purpose <br/>we employ novel firm-level panel data of major European electricity utilities. Our results <br/>confirm the presence of substantial EVI, which put the policy measure of transmission <br/>ownership unbundling into question. (authors' abstract)