Current discussion about how to reform European support schemes for renewable electricity neglects certain risks of market power in wholesale electricity markets. In a stylized Cournot model of interacting spot and forward electricity markets, I analyze how dierent price-based support schemes aect producer strategies and, ultimately, competition in the wholesale market. I compare the strategic behavior of renewable and conventional producers in terms of electricity production and forward market sales in the presence of two dierent price-based support schemes: feed-in taris and feed-in premiums. I show that the feed-in premium, which is the European Commission's current scheme of choice, may enhance market power and favor conventional electricity production. It may also reduce the likelihood of achieving the political objective to increase production from renewable energy sources.

This paper was approved and declassified by written procedure by the Committee for Industry, Innovation and Entrepreneurship (CIIE) on 2 April 2021 and prepared for publication by the OECD Secretariat.

No abstract

Disclosure of energy performance certicates (EPCs) is often incomplete, which hampers their eectiveness in relieving information asymmetries between landlords and tenants in the housing market. Even when a certicate is available, landlords do not always disclose it. This contradicts the unraveling result, according to which all landlords should disclose quality information unless it is costly to do so. We leverage a cross-sectional dataset of residential rental advertisements from the Belgian region of Brussels to empirically evaluate incentives to disclose an EPC. We nd that two fundamental assumptions for the unraveling result are not conrmed in our setting: tenants value energy performance of rental property only when dwellings are of very high quality and do not appear to rationally adjust their expectations when faced with dwellings that withhold their EPC. The paper formulates specic policy advice for reforming EPC mechanisms to increase disclosure rates.

We quantify how switching costs and limited awareness affect consumer inertia in liberalized retail electricity markets by developing and estimating a structural demand model using a novel dataset on electricity contract choices in Belgium. Our data allow us to disentangle different sources of inertia by using a rich combination of macromoments and micromoments. We find that consumers perceive contracts as differentiated and both limited awareness and switching costs hinder efficient choices. Our counterfactuals reveal substantial welfare gains from alleviating both frictions, in particular switching costs, and that a well-regulated monopoly can generate similar consumer surplus as the current deregulated market. (JEL D12, D83, L13, L43, L94, L98)