UK Energy market( specifically the suppliers of electricity and gas)
1)Outline the trend in sales by the major companies who supply energy in the UK over the last 5 to 10 years, and analyse the structure of the UK energy supply sector. To do this you should;
-identify the main companies involved and their market share.
-explain what type of market structure exist, with supporting evidence.
-explain, using economic diagrams, how price and output is determined by a typical firm (ie.one energy supply company) which is operating in the market. (Note that your market will be imperfect compettition, not perfect competition. Thus, ypu cannot use supply and demand diagrams in this question), (55%)
2)(a) What are barriers to entry, and which ones do ypu think are significant in this case? Explain your answer referring to your answer in question 1.
(b) Why is Ofgem keen for new companies to enter the energy retail market, and what effect would this have on the profits of incumbent(existing) firms? Again refer to your answer im question 1.(45%)
Recomended references: Begg D and Ward, ‘Economics for Business’
Ferguson K, ‘Essentials of Economics’
Ofgem (the UK energy regulator), State of the Market Assessment, March 2014
Competition and Markets Authority (the UK competition body)
Financial Times (find via JOURNALS on the library web)
Economist (find via JOURNALS on the library web)
BBC, Big six energy firms lose market share, 8 September 2014
BBC, Energy probe could lead to major structural change, 26 June 2014
Bank of England (has exchange rate data)
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