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...

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Publicado en:RAND Journal of Economics (Wiley-Blackwell) Vol. 56; no. 2; pp. 129 - 145
Autores principales: Dertwinkel‐Kalt, Markus, Wey, Christian
Formato: Artículo
Publicado: Wiley-Blackwell Summer2025
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Acceso en línea:Ver este registro en EBSCOhost
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        atl: Why "Energy Price Brakes" Encourage Moral Hazard, Raise Energy Prices, and Reinforce Energy Savings.
      aug:
        au:
          Dertwinkel‐Kalt, Markus
          Wey, Christian
        affil:
          Max Planck Institute for Research on Collective Goods, University of Münster
          Düsseldorf Institute for Competition Economics (DICE), Heinrich Heine University Düsseldorf
      su:
        Russian invasion of Ukraine, 2022-
        Energy industries
        Moral hazard
        Energy shortages
        Market design & structure (Economics)
      sug:
        subj:
          Russian invasion of Ukraine, 2022-
          Energy industries
          Moral hazard
          Energy shortages
          Market design & structure (Economics)
      keyword:
        energy crisis
        energy price brake
        energy price policies
        energy saving
        energy crisis
        energy price brake
        energy price policies
        energy saving
      ab: 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.
      pubtype: Academic Journal
      doctype: Article
      src: R
    language: English
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