Arbeitspapier
Why "energy price brakes" encourage moral hazard, raise energy prices, and reinforce energy savings
To help households and firms with exploding energy costs in the aftermath of the Ukraine war, a new policy called the "energy price brake" was implemented. A unique feature of this relief measure is that it provides a transfer that increases in the consumer's contractual per-unit price of energy. In a formal model, we show that this policy creates incentives for moral hazard of energy providers to raise per-unit prices. Whereas this moral hazard problem increases the policy's fiscal costs, it also reinforces energy savings. Whether the policy's main beneficiaries are consumers or firms depends on the market structure.
- ISBN
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978-3-86304-406-0
- Language
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Englisch
- Bibliographic citation
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Series: DICE Discussion Paper ; No. 407
- Classification
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Wirtschaft
Microeconomic Policy: Formulation, Implementation, and Evaluation
Monopoly; Monopolization Strategies
Energy: Government Policy
International Law
- Subject
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Energy Price Policies
Energy Crisis
Energy Saving
Energy Price Brake
- Event
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Geistige Schöpfung
- (who)
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Dertwinkel-Kalt, Markus
Wey, Christian
- Event
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Veröffentlichung
- (who)
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Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
- (where)
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Düsseldorf
- (when)
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2023
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Dertwinkel-Kalt, Markus
- Wey, Christian
- Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
Time of origin
- 2023
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