The Gas Price Brake Increases Gas Prices: Empirical Evidence

Lukas Brunninger, Markus Dertwinkel-Kalt, Klaus Gugler, Sven Heim

Publication: Working/Discussion PaperWU Working Paper

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Abstract

In the aftermath of the Russian invasion in Ukraine and rising gas prices, the “gas Price brake” was implemented in Germany. We employ a difference-in-differences Approach and analyze data on offered gas contracts from two countries with comparable gas markets, where one country (Germany) has implemented the gas price brake and the other (Austria) has not. Our findings support the theoretical prediction, indicating that the gas price brake led to an increase in total annual gas costs in Germany. This increase is entirely attributable to incumbents increasing counterfactual gas prices by up to 90%. Non-incumbents do not ’milk‘ the brake.
Original languageEnglish
PublisherWU Vienna University of Economics and Business
DOIs
Publication statusPublished - Oct 2024

Publication series

SeriesDepartment of Economics Working Paper Series
Number372

WU Working Paper Series

  • Department of Economics Working Paper Series

Keywords

  • Energy Policy
  • Gas Price Brake
  • Moral Hazard
  • Incumbents

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