Scale properties and efficient network structures in the Swedish electricity distribution market

This paper examines the Swedish electricity distribution sector to highlight three key findings. First, we identify significant economies of scale among electricity distribution firms, indicating that larger firms operate more efficiently. Second, we explore alternative market structures and demonstrate that these can substantially reduce the aggregated costs of electricity distribution. Third, we use novel survey data to show that firms perceive the economic incentives for mergers to be insufficient. These findings suggest that policymakers should consider creating a regulatory environment that encourages consolidation and enhance efficiency in the sector.