MARKET CONCENTRATION AND PRICE DISCRIMINATION IN THE ENERGY SECTOR OF UKRAINE

Abstract

The article investigates the phenomenon of monopolization in Ukraine’s energy sector, encompassing electricity generation and supply, the oil and gas industry, and district heating systems. The research is grounded in the conceptual framework of industrial organization theory and competition economics, focusing on both structural and behavioral dimensions of market power. Particular attention is paid to the coexistence of competitive and monopolistic elements that arise from the technological, infrastructural, and institutional characteristics of energy markets, many of which exhibit features of natural monopolies.

In addition to structural indicators, the article emphasizes behavioral markers of monopolization, with a particular focus on price discrimination practices. Differentiation of tariffs across consumer groups and regions is examined as an empirical manifestation of market power. Such practices are especially evident in district heating markets, where households are effectively locked into single suppliers due to ownership of heat networks, while cross-subsidization between residential and industrial consumers distorts price signals and allocative efficiency.

To ensure a robust and multidimensional assessment, the study substantiates the application of quantitative analytical tools, primarily the Herfindahl–Hirschman Index (HHI), as a standard measure of market concentration, alongside indicators of price discrimination to capture behavioral aspects of dominance. The combined use of these instruments allows for a more accurate diagnosis of monopolization, overcoming the limitations of approaches that rely solely on structural metrics.

The findings underline that monopolization in Ukraine’s energy sector is not merely a consequence of market failures but also a result of institutional legacies and regulatory design. Consequently, effective competition policy should integrate structural deconcentration measures with regulatory reforms aimed at enhancing transparency, preventing discriminatory pricing, and facilitating market entry where technologically feasible. The proposed analytical framework contributes to the development of evidence-based competition and energy policies, particularly relevant for countries with transitional economies and regulated energy markets.