Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/278737 
Year of Publication: 
2023
Series/Report no.: 
DICE Discussion Paper No. 407
Publisher: 
Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE), Düsseldorf
Abstract: 
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.
Subjects: 
Energy Price Policies
Energy Crisis
Energy Saving
Energy Price Brake
JEL: 
D04
L12
Q48
K33
ISBN: 
978-3-86304-406-0
Document Type: 
Working Paper

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