Negotiated Third Party Access – an Industrial Organisation Perspective

In the course of the liberalization of the European energy markets, the German government opted – diverging from all other European countries – for Negotiated Third-Party Access. In this article we analyze if this institutional regime could theoretically lead to efficient market outcomes. Above that, we empirically review whether certain aspects of the actual implementation, the publication of the network access charges for each network supplier in particular, facilitated or inhibited competition. For the first issue we theoretically applied the Coase-Theorem on the electricity market, demonstrating that a pure negotiation regime (without ex-post control) allows technical efficiency, but does not avoid welfare losses due to allocative inefficiency, more precisely Cournot pricing. Moreover, our empirical analysis shows that the publication of the access charges supported not only market transparency; the price adjustment over time tends to be an indicator for tacit collusion: Though the expensive suppliers cut their prices, the cheap ones raised their charges. keywords : vertical integration, tacit collusion, deregulation JEL-Classification: D42, L43, L94