Strategic Behavior Among Swedish Distribution Firms: Responsive Pricing of Grid Tariffs to Retail Electricity Costs of Households
Abstract: In this thesis paper, we investigate if the divergent trend of grid tariffs in the Swedish electricity market could be linked to electricity price differences between bidding zones. We propose and test an explanatory model in which network operating firms strategically price their grid tariffs as a response to retail electricity costs of households. Our results indicate that there could be a compensatory effect between grid tariffs and household retail electricity costs, and that this effect is stronger for firms with profit-maximization incentives and vertical integration across distribution, retail and production.
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