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Simulation of World Oil Market Shocks: A Markov Analysis of OPEC and Consumer Behavior

Richard F. Kosobud and Houston H. Stokes

Year: 1980
Volume: Volume 1
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol1-No2-3
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Abstract:
One major determinant of crude oil price will be the question of whether or not OPEC can resolve its internal conflicts and act effectively as a coalition in restricting the quantities it will supply. For the economist, this question stands at the center of the energy problem; unfortunately, economic analysis has little that is definite to say about the question, and consequently little to say about how OPEC determines its posted price policies and the quantities of oil to be placed on the market. Economic analysis has also failed to provide any definite explanation of the fact that individual OPEC members have not been prone to seek net revenue increases through additional sales, even during periods of declining sales or during oil gluts such as the 1975 recession in OECD countries.



The Future of Retail Energy Markets

Catherine Waddams Price

Year: 2008
Volume: Volume 29
Number: Special Issue #2
DOI: 10.5547/ISSN0195-6574-EJ-Vol29-NoSI2-7
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Abstract:
Britain was one of the first countries to introduce competition to retail energy markets in 1998; after a decade of choice, around half of its residential consumers have switched supplier. This paper presents evidence on consumer and supplier behaviour over the decade since the markets were opened to assess the success of the experience to date. The early debate about the value of extending choice to householders, in which David Newbery was amongst those who expressed doubts, remains to be resolved in an era of rising costs and increasing politicisation. While Britain has coped very well with wholesale market power, ending the domestic franchise and removing regulation from the retail supply margin has exposed households to considerable increases in those margins, as switching costs appear significant, and vertically integrated companies have been effective in exploiting their power. David Newbery, Market Design, EPRG working paper 0515 p.9, 2005



Measuring Switching Costs in the Italian Residential Electricity Market

Marco Magnani, Fabio M. Manenti, and Paola Valbonesi

Year: 2024
Volume: Volume 45
Number: Number 2
DOI: 10.5547/01956574.45.2.mmag
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Abstract:
Residential electricity markets in European countries are still characterized by low consumer engagement, especially where regulated and liberalized markets coexist. Using an original dataset on 2015-2018 prices for the Italian electricity market, augmented with the number of residential consumers, we study the presence and magnitude of switching costs-i.e., time-based and cognitive-based costs on consumers changing providers-in the liberalized market. We find that switching from the incumbent involves high costs-almost as high as the yearly energy expenditure-while switching from competitors is less expensive. We also carry out two counterfactual analyses. In the first, we show that consumers would have incurred lower average switching costs over the years had the markset been less concentrated. In the second, we simulate how switching costs could evolve once regulated prices are phased out, and the market is fully liberalized.





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