Economics Coursework Example | Topics and Well Written Essays - 1500 words

Economics - Coursework Example The objective of the essay is to identify the challenges that have punctuated the energy market, the nature of business competition and possible approaches to handling these problems. To achieve this, the essay will point the constraints that exist in the market and use a theoretical approach to examine possible causes for these challenges. This way, it will be possible to make recommendation on how market regulation and demand side management can be used to solve these problems. The UK energy sector has shown a dynamic trend in the last few years with changes in energy prices and consumer expenditure. The Office for National Statistics noted that there was consistent increase in prices of both electricity and gas within the country. Between the year 2011 and 2013, the percentage price changes of both electricity and gas exceeded 10% in the UK. This is contrary to the expectation of the consumer at a time when the government strategic goals were directed towards reduction in the cost energy (Foxon et al., 2000). The poorest households in the UK have been adversely affected by the rise in cost of energy in the UK. Statistics show that the rich household energy costs increased by 1% while the poor households experienced an increase of 3% in cost energy between 2002 and 2012. These changes have been criticized as oppressive and there appears need for change in policies to prevent further increase in the cost of Energy as part of the government’s manifest o to support equity and reduce poverty level. The UK Energy Market Firm market concentration statistics provides a possible explanation for the changes in energy demand and prices within the country. A Herfindal-Hirschman analysis shows that the index remained fairly constant between 2005 and 2008 but increased considerably between the year 2010 and 2013. An increase in the index shows that there is considerable