Abstract
Despite the monopolistic networks, the liberalized electricity supply industry in Germany is unregulated; the network-access charges are only subject to competition law, not to ex-ante approval. This paper explores the consequences of this policy by analyzing empirical observation with the theory of vertical relations. It concludes that the authorities' focus should be on the level of the access charges and not on discriminatory behavior. Unregulated access charges imply that the integrated firms have different incentives as compared to the independent entrants with respect to the competitive markets. Thereby, the principle of a level playing field is violated.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Allen, B. T. (1971). “Vertical Integration and Market Foreclosure: The Case of Cement and Concrete.” Journal of Law andEconomics. 14, 251–274.
Baumol, W., Ordover, J. & Willig, R. (1996). “Parity Pricing and Its Critics: Necessary Condition forEfficiency in Provision of Bottleneck Services to Competitiors.” Economic Research Reports, No. 96-33, C. V. Starr Center for Applied Economics, New York University.
Beard, T. R., Kaserman, D. L. & Mayo, J. W. (2000). “Regulation, Vertical Integration and Sabotage.”Mimeo, Auburn University.
Bergman, L., Brunekreeft, G., Doyle, C., von der Fehr, N.-H., Newbery, D. M., Pollitt, M. & Régibeau, P. (1999).“A European Market for Electricity?” In Monitoring European Deregulation 2, CEPR/SNS, London/Stockholm.
Bergman, M. A.(2000). “A Note on N. Economides: The Incentive for Non-Price Discrimination by an Input Monopolist.” International Journal of Industrial Organization. 18, 985–988.
Brunekreeft, G. (2001a). “Regulation and Third-Party Discrimination in Vertically Related Markets: TheCase of German Electricity.” Discussion Paper, No. 74, revised March 2001, University of Freiburg.
Brunekreeft, G. (2001b).“Negotiated Third-Party Access in the German Electricity Supply Industry.” Economia Della Fonti Di Energia E Dell' Ambiente, forthcoming.
Brunekreeft, G. (2001c). “Regulatory Threat in Vertically Related Markets; The Case of German Electricity.” Mimeo, University of Freiburg.
Brunekreeft, G. & Keller, K. (2000). “The Electricity Supply Industry in Germany; Market Power or Power of the Market?” Utilities Policy. 9, 15–29.
Bundeskartellamt. (2001). Bericht der Arbeitsgruppe Netznutzung Strom der Kartellbehörden des Bundes und der Länder,Bonn: Bundeskartellamt, April 19.
Economides, N. S. (1998). “The Incentive for Non-Price Discrimination by an Input Monopolist.”International Journal of Industrial Organization. 16, 271–284.
Economides, N. S. (2000). “Comment on “A Note on N. Economides:The Incentive for Non-Price Discrimination by an Input Monopolist” by Mats Bergman.” International Journal of Industrial Organization. 18, 989–991.
Economides, N. S. & White, L.J. (1995). “Access and Interconnection Pricing: How Efficient Is the “Efficient Component PricingRule?” Antitrust Bulletin. 40, 557–577.
Electricity Association. (2000). Electricity Industry Review 4, London: ElectricityAssociation.
European Commission. (2001). “Proposal for a Directive of the European Parliament and of the Council Amending Directives96/92/EC and 98/30/EC Concerning Common Rules for the Internal Market in Electricity and Natural Gas.” Commission Communication, COM(2001) 125 provisional version, European Commission, Brussels.
LBD. (2000). Analyse zu Durchleitungsentgelten am Beispiel RWE AG: StudyCommissioned by Riva Energie AG. Berlin: LBD Beratungsgesellschaft.
Mandy, D. M. (2000). “Killing the Goose That May Have Laid theGolden Egg: Only the Data Know Whether Sabotage Pays.” Journal of Regulatory Economics. 17, 157–172.
Newbery, D. M. (2001).“Regulating Unbundled Network Utilities,” presented at EARIE 2001, Dublin, downloadable: http://www.econ.cam.ac.uk/.
OFGEM.(2000a). A Review of the Development of Competition in Domestic Gas and Electricity Supply, London: OFGEM.
OFGEM. (2000b). AReview of the Development of Competition in Industrial and Commercial Electricity Supply, London: OFGEM, December.
Patterson, R. (1998).“Light-Handed Regulation in New Zealand Telecommunications Ten Years on: Stimulus to Competition or Monopolist' Charter,” circulated by TUANZ, Auckland, April.
Posner, R. A. (1979). “The Chicago School of Antitrust Analysis.” University of Pennsylvania Law Review.127, 925–952.
Reiffen, D. (1998). “A Regulated Firm' Incentive to Discriminate: A Reevaluation and Extension of Weisman'Result.” Journal of Regulatory Economics. 14, 79–86.
Reiffen, D., Schumann, L. & Ward, M. R. (2000). “Discriminatory Dealingwith Downstream Competitors: Evidence from the Cellular Industry.” Journal of Industrial Economics. 48, 253–286.
Riechmann, Chr.(2000). “Strategic Pricing of Grid Access under Partial Price-Caps: Electricity Distribution in England & Wales.” Energy Economics. 22, 187–207.
Sibley, D. S. & Weisman, D. L. (1998). “Raising Rivals' Costs: The Entry of an Upstream Monopolist into DownstreamMarkets.” Information Economics and Policy. 10, 451–470.
Target AG. (2000). Analysen zum liberalisierten Strommarkt:Marktstudie 2000, Wetzlar: Target AG.
VDEW. (2000). Ergebnisbericht des VDEW-Kundenfokus 2000, Frankfurt/Main: VDEW,December.
Weisman, D. L. (1995). “Regulation and the Vertically Integrated Firm: The Case of RBOC Entry into Interlata Long Distance.”Journal of Regulatory Economics. 8, 249–266.
Weisman, D. L. (1998). “The Incentive to Discriminate by a Vertically-IntegratedRegulated Firm: A Reply.” Journal of Regulatory Economics. 14, 87–91.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Brunekreeft, G. Regulation and Third-Party Discrimination in the German Electricity Supply Industry. European Journal of Law and Economics 13, 203–220 (2002). https://doi.org/10.1023/A:1014718416616
Issue Date:
DOI: https://doi.org/10.1023/A:1014718416616