Abstract
The goal of achieving a single European market for electricity has been one of the main objectives for European countries since the “Single European Act” of 1988. The main purpose of this study is to examine whether the aim of unified electricity market has been achieved in terms of the convergence of electricity prices. β-Convergence and σ-convergence tests, are applied for 12 European Union states electricity price data through the period of 2003–2017. For this reason, along with conventional applied techniques, recently improved unit root tests are implemented for both linear and nonlinear data generating processes. The results suggest that convergence did not occur for most of the considered countries.
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Notes
- 1.
The Solow Growth Model, which is based on diminishing marginal productivity of capital, is considered to be the origin for the convergence hypothesis. According to this model, production level of different countries with similar level of technological advancement should eventually even up, regardless of initial endowment.
- 2.
See Kapetanios et al. (2003) for more detailed discussion.
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Telatar, M.E., Yaşar, N. (2020). The Convergence of Electricity Prices for European Union Countries. In: Dorsman, A., Arslan-Ayaydin, Ö., Thewissen, J. (eds) Regulations in the Energy Industry. Springer, Cham. https://doi.org/10.1007/978-3-030-32296-0_4
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