Is the Electricity Market Efficient? - An Investigation of the Norwegian Electricity Market

Abstract

The electricity retailing market has been brought to attention recently for gaining massive revenues and confusing consumers in its pricing settings. This paper intends to examine the efficiency in the electricity end-user market and discuss potential influencing factors. The study’s results indicate problems to certain degrees, such that retailers are reluctant to behave optimally on behalf of consumers. Many factors also hinder a large portion of passive consumers psychologically from switching retailers to obtain better benefits. Analyses show the significant scale of markups presenting a high level of market concentration; many results lead to the conclusion that the Norwegian electricity market is inefficient and at an imbalance.