Your task is to read the relevant reports on electricity retailing market, analyse the pricing data you have collected and comment on the nature of competition in the electricity retailing market in South Australia. In doing this, you should address the following questions.

1. What market structure best describe the electricity retail market in South Australia? Please include the number and size distribution of firms, HHI, the barriers to entry and exit and the degree of product differentiation in your discussion

2. Explain whether any electricity retailer in SA possess market power and where its market power comes from. How are electricity consumers affected as a result?

3. What are the pricing strategies of these firms? Do they adopt any of the pricing strategies discussed in Topic 3? How can those pricing strategies help the firms to increase market share and/or profit? Use the data you have collected to support your arguments.

4. How is the cheapest plan different from the standing offer? Why do energy providers offer so many plans in addition to the standing offer? If the government wants to make electricity more affordable, provide a brief overview of two possible policies that the government could implement if it wishes to reduce the price of electricity for consumers? What, if any, any unintended consequences might come from these?