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The Impact of Competition Policy Enforcement on the Functioning of EU Energy Markets

Abstract:
We investigate the impact of competition policy enforcement on the functioning of European energy markets while accounting for sectoral regulation. For this purpose, we compile a novel dataset on the European Commission's (EC) and EU member states' competition policy decisions in energy markets and combine it with firm- and sector-level data. We find that EC merger policy has a positive and robust impact on (i) the level of competition, (ii) investment and (iii) productivity. This impact, however, only shows up in low-regulated sectors. Other competition policy tools - EC state aid control and anti-trust, as well as all member state policy variables - do not have a uniform effect on energy markets. Our findings are consistent with the idea that the EC's merger policy actions have been used to overcome obstacles to a well-functioning EU energy sector and may have contributed to the overall development of gas and electricity markets in Europe.

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Keywords: Ex-post evaluation competition policy energy markets

DOI: 10.5547/01956574.40.5.tdus

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Published in Volume 40, Number 5 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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