Electricity prices as signals for the evaluation of reforms: an empirical analysis of four European countries

The paper considers price trends as signals for the evaluation of reforms leading to ownership or market structure changes in public services. In order to do so, we focus on a specific example: electricity prices in four countries, namely UK, France, Germany and Italy. We consider that these countries offer a natural experiment in different patterns of public/private ownership and liberalisation of electricity industry. We use price changes as a signal and observe that there is no clear dominance of one pattern in terms of welfare change for the representative consumer. This conclusion tends to reject the widely held idea that one specific “orthodox” pattern should be preferred: privatisation with liberalisation and vertical disintegration. The empirical evidence does not sustain any strong claim of superiority of such a pattern.