Abstract
Compared to traditional cost-of-service regulation, electricity retail competition may lead to lower costs but higher markups. Thus, the net policy effect on the average electricity retail price is ambiguous. This paper uses a difference-in-difference approach to estimate the policy impact for U.S. states that restructured their electricity retail markets. The results suggest that in restructured states, only residential customers have benefited from significantly lower prices but not commercial or industrial customers. Furthermore, this benefit is transitory and disappears in the long run. Overall, retail competition does not seem to deliver lower electricity prices to retail customers across the board or over time.
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