The convergence of electricity prices for european union countries

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 s-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.