Powering Up Developing Countries through Integration?

Power market integration is analyzed in a two-country model with nationally regulated firms and costly public funds. If the generation costs between the two countries are too similar, negative business stealing outweighs efficiency gains so that th...

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Main Authors:	Auriol, Emmanuelle, Biancini, Sara
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	ADVANCED ECONOMIES ADVERSE EFFECT ADVERSE IMPACT ALTERNATIVE INVESTMENT ARBITRATION ASYMMETRIC INFORMATION BANK POLICY BENCHMARK BUDGET CONSTRAINT CAPACITY BUILDING CLAIMANT CLOSED ECONOMY COMMODITIES COMMON MARKET COMPETITION FOR MARKET COMPETITIVE FRINGE CONFLICT OF INTEREST CONSUMER SURPLUS CONSUMERS COORDINATION FAILURE COST FUNCTIONS COST REDUCTION DEBT DEMAND FUNCTION DEMAND FUNCTIONS DEREGULATION DERIVATIVE DEVELOPING COUNTRIES DEVELOPMENT AGENCY DEVELOPMENT ASSISTANCE DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISPUTE RESOLUTION DIVIDENDS DOMESTIC MARKET DUMPING DUOPOLY ECONOMIC INTEGRATION ECONOMIC SYSTEMS ECONOMIC THEORY ECONOMIES OF SCALE ELASTICITY ELASTICITY OF DEMAND ENERGY RESOURCES EQUILIBRIUM EQUILIBRIUM PRICE EXISTING INFRASTRUCTURE EXPORTERS EXPROPRIATION EXTERNALITIES FINANCIAL CRISIS FINANCIAL SUPPORT FIXED INVESTMENT FOREIGN FIRM FOREIGN FIRMS FOREIGN MARKET FREE TRADE FREE TRADE AGREEMENT GLOBAL INVESTMENT GLOBALIZATION GOVERNMENT BUDGET HOLDINGS IMPERFECT COMPETITION IMPORT QUOTAS INCOME INCOME LEVELS INDEBTED COUNTRIES INEFFICIENCY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INFRASTRUCTURES INSTRUMENT INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTING INVESTMENT CHOICE INVESTMENT CHOICES INVESTMENT REQUIREMENT JURISDICTION JUSTICE SYSTEMS LESS DEVELOPED COUNTRIES LOW-INCOME COUNTRIES MARGINAL COST MARGINAL COST PRICING MARGINAL COSTS MARKET ECONOMIES MARKET INTEGRATION MARKET POWER MARKET SHARE MARKET SHARES MARKET SIZE MARKET SIZES MARKET STRUCTURE MONOPOLY NATURAL RESOURCES OLIGOPOLISTIC MARKETS OLIGOPOLY OPEN ECONOMY OPEN MARKET OPPORTUNITY COST OPTIMAL INVESTMENT PARTICIPATION CONSTRAINT POLITICAL ECONOMY POSITIVE EXTERNALITIES POTENTIAL INVESTORS PRIVATIZATION PRODUCTION COSTS PROPERTY RIGHTS PUBLIC DEBT PUBLIC FUND PUBLIC FUNDS PUBLIC GOOD PUBLIC OWNERSHIP PUBLIC UTILITIES RAMSEY PRICE REDISTRIBUTIVE EFFECTS REGIONAL INTEGRATION REGIONAL POWER REGULATOR REGULATORS REGULATORY AUTHORITY REGULATORY BODIES REGULATORY BODY RESERVE RULE OF LAW SALES SHADOW PRICE SHAREHOLDERS SMALL COUNTRY SOCIAL COST SUSTAINABLE INVESTMENT TARIFF REVENUES TAX TAX RATE TAX RATES TAX STRUCTURE TAXATION TRADE LIBERALIZATION TRADING TRADING MARKET TRANSACTION TRANSACTION COSTS TRANSITION ECONOMIES TRANSPORT TRANSPORT CHARGES TRANSPORTATION TRANSPORTATION COST TRANSPORTATION COSTS TRANSPORTATION FACILITIES TRANSPORTATION INFRASTRUCTURE TRUE UNIFORM PRICE VALUATION VARIABLE COST WORLD DEVELOPMENT INDICATORS electricity investment regulation
Online Access:	http://documents.worldbank.org/curated/en/2013/06/17888008/powering-up-developing-countries-through-integration http://hdl.handle.net/10986/15852

id	okr-10986-15852
recordtype	oai_dc
spelling	okr-10986-158522021-04-23T14:03:23Z Powering Up Developing Countries through Integration? Auriol, Emmanuelle Biancini, Sara ADVANCED ECONOMIES ADVERSE EFFECT ADVERSE IMPACT ALTERNATIVE INVESTMENT ARBITRATION ASYMMETRIC INFORMATION BANK POLICY BENCHMARK BUDGET CONSTRAINT CAPACITY BUILDING CLAIMANT CLOSED ECONOMY COMMODITIES COMMON MARKET COMPETITION FOR MARKET COMPETITIVE FRINGE CONFLICT OF INTEREST CONSUMER SURPLUS CONSUMERS COORDINATION FAILURE COST FUNCTIONS COST REDUCTION DEBT DEMAND FUNCTION DEMAND FUNCTIONS DEREGULATION DERIVATIVE DEVELOPING COUNTRIES DEVELOPMENT AGENCY DEVELOPMENT ASSISTANCE DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISPUTE RESOLUTION DIVIDENDS DOMESTIC MARKET DUMPING DUOPOLY ECONOMIC INTEGRATION ECONOMIC SYSTEMS ECONOMIC THEORY ECONOMIES OF SCALE ELASTICITY ELASTICITY OF DEMAND ENERGY RESOURCES EQUILIBRIUM EQUILIBRIUM PRICE EXISTING INFRASTRUCTURE EXPORTERS EXPROPRIATION EXTERNALITIES FINANCIAL CRISIS FINANCIAL SUPPORT FIXED INVESTMENT FOREIGN FIRM FOREIGN FIRMS FOREIGN MARKET FREE TRADE FREE TRADE AGREEMENT GLOBAL INVESTMENT GLOBALIZATION GOVERNMENT BUDGET HOLDINGS IMPERFECT COMPETITION IMPORT QUOTAS INCOME INCOME LEVELS INDEBTED COUNTRIES INEFFICIENCY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INFRASTRUCTURES INSTRUMENT INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTING INVESTMENT CHOICE INVESTMENT CHOICES INVESTMENT REQUIREMENT JURISDICTION JUSTICE SYSTEMS LESS DEVELOPED COUNTRIES LOW-INCOME COUNTRIES MARGINAL COST MARGINAL COST PRICING MARGINAL COSTS MARKET ECONOMIES MARKET INTEGRATION MARKET POWER MARKET SHARE MARKET SHARES MARKET SIZE MARKET SIZES MARKET STRUCTURE MONOPOLY NATURAL RESOURCES OLIGOPOLISTIC MARKETS OLIGOPOLY OPEN ECONOMY OPEN MARKET OPPORTUNITY COST OPTIMAL INVESTMENT PARTICIPATION CONSTRAINT POLITICAL ECONOMY POSITIVE EXTERNALITIES POTENTIAL INVESTORS PRIVATIZATION PRODUCTION COSTS PROPERTY RIGHTS PUBLIC DEBT PUBLIC FUND PUBLIC FUNDS PUBLIC GOOD PUBLIC OWNERSHIP PUBLIC UTILITIES RAMSEY PRICE REDISTRIBUTIVE EFFECTS REGIONAL INTEGRATION REGIONAL POWER REGULATOR REGULATORS REGULATORY AUTHORITY REGULATORY BODIES REGULATORY BODY RESERVE RULE OF LAW SALES SHADOW PRICE SHAREHOLDERS SMALL COUNTRY SOCIAL COST SUSTAINABLE INVESTMENT TARIFF REVENUES TAX TAX RATE TAX RATES TAX STRUCTURE TAXATION TRADE LIBERALIZATION TRADING TRADING MARKET TRANSACTION TRANSACTION COSTS TRANSITION ECONOMIES TRANSPORT TRANSPORT CHARGES TRANSPORTATION TRANSPORTATION COST TRANSPORTATION COSTS TRANSPORTATION FACILITIES TRANSPORTATION INFRASTRUCTURE TRUE UNIFORM PRICE VALUATION VARIABLE COST WORLD DEVELOPMENT INDICATORS electricity investment regulation Power market integration is analyzed in a two-country model with nationally regulated firms and costly public funds. If the generation costs between the two countries are too similar, negative business stealing outweighs efficiency gains so that the subsequent integration welfare decreases in both regions. Integration is welfare enhancing when the cost difference between two regions is large enough. The benefits from export profits increase the total welfare in the exporting country, whereas the importing country benefits from lower prices. In this case, market integration also improves incentives to invest compared to autarky. The investment levels remain inefficient, however, especially for transportation facilities. Free riding reduces incentives to invest in these public-good components of the network, whereas business stealing tends to decrease the capacity to finance new investment. 2013-09-26T15:04:43Z 2013-09-26T15:04:43Z 2013-06 http://documents.worldbank.org/curated/en/2013/06/17888008/powering-up-developing-countries-through-integration http://hdl.handle.net/10986/15852 English en_US Policy Research Working Paper;No. 6494 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ADVANCED ECONOMIES ADVERSE EFFECT ADVERSE IMPACT ALTERNATIVE INVESTMENT ARBITRATION ASYMMETRIC INFORMATION BANK POLICY BENCHMARK BUDGET CONSTRAINT CAPACITY BUILDING CLAIMANT CLOSED ECONOMY COMMODITIES COMMON MARKET COMPETITION FOR MARKET COMPETITIVE FRINGE CONFLICT OF INTEREST CONSUMER SURPLUS CONSUMERS COORDINATION FAILURE COST FUNCTIONS COST REDUCTION DEBT DEMAND FUNCTION DEMAND FUNCTIONS DEREGULATION DERIVATIVE DEVELOPING COUNTRIES DEVELOPMENT AGENCY DEVELOPMENT ASSISTANCE DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISPUTE RESOLUTION DIVIDENDS DOMESTIC MARKET DUMPING DUOPOLY ECONOMIC INTEGRATION ECONOMIC SYSTEMS ECONOMIC THEORY ECONOMIES OF SCALE ELASTICITY ELASTICITY OF DEMAND ENERGY RESOURCES EQUILIBRIUM EQUILIBRIUM PRICE EXISTING INFRASTRUCTURE EXPORTERS EXPROPRIATION EXTERNALITIES FINANCIAL CRISIS FINANCIAL SUPPORT FIXED INVESTMENT FOREIGN FIRM FOREIGN FIRMS FOREIGN MARKET FREE TRADE FREE TRADE AGREEMENT GLOBAL INVESTMENT GLOBALIZATION GOVERNMENT BUDGET HOLDINGS IMPERFECT COMPETITION IMPORT QUOTAS INCOME INCOME LEVELS INDEBTED COUNTRIES INEFFICIENCY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INFRASTRUCTURES INSTRUMENT INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTING INVESTMENT CHOICE INVESTMENT CHOICES INVESTMENT REQUIREMENT JURISDICTION JUSTICE SYSTEMS LESS DEVELOPED COUNTRIES LOW-INCOME COUNTRIES MARGINAL COST MARGINAL COST PRICING MARGINAL COSTS MARKET ECONOMIES MARKET INTEGRATION MARKET POWER MARKET SHARE MARKET SHARES MARKET SIZE MARKET SIZES MARKET STRUCTURE MONOPOLY NATURAL RESOURCES OLIGOPOLISTIC MARKETS OLIGOPOLY OPEN ECONOMY OPEN MARKET OPPORTUNITY COST OPTIMAL INVESTMENT PARTICIPATION CONSTRAINT POLITICAL ECONOMY POSITIVE EXTERNALITIES POTENTIAL INVESTORS PRIVATIZATION PRODUCTION COSTS PROPERTY RIGHTS PUBLIC DEBT PUBLIC FUND PUBLIC FUNDS PUBLIC GOOD PUBLIC OWNERSHIP PUBLIC UTILITIES RAMSEY PRICE REDISTRIBUTIVE EFFECTS REGIONAL INTEGRATION REGIONAL POWER REGULATOR REGULATORS REGULATORY AUTHORITY REGULATORY BODIES REGULATORY BODY RESERVE RULE OF LAW SALES SHADOW PRICE SHAREHOLDERS SMALL COUNTRY SOCIAL COST SUSTAINABLE INVESTMENT TARIFF REVENUES TAX TAX RATE TAX RATES TAX STRUCTURE TAXATION TRADE LIBERALIZATION TRADING TRADING MARKET TRANSACTION TRANSACTION COSTS TRANSITION ECONOMIES TRANSPORT TRANSPORT CHARGES TRANSPORTATION TRANSPORTATION COST TRANSPORTATION COSTS TRANSPORTATION FACILITIES TRANSPORTATION INFRASTRUCTURE TRUE UNIFORM PRICE VALUATION VARIABLE COST WORLD DEVELOPMENT INDICATORS electricity investment regulation
spellingShingle	ADVANCED ECONOMIES ADVERSE EFFECT ADVERSE IMPACT ALTERNATIVE INVESTMENT ARBITRATION ASYMMETRIC INFORMATION BANK POLICY BENCHMARK BUDGET CONSTRAINT CAPACITY BUILDING CLAIMANT CLOSED ECONOMY COMMODITIES COMMON MARKET COMPETITION FOR MARKET COMPETITIVE FRINGE CONFLICT OF INTEREST CONSUMER SURPLUS CONSUMERS COORDINATION FAILURE COST FUNCTIONS COST REDUCTION DEBT DEMAND FUNCTION DEMAND FUNCTIONS DEREGULATION DERIVATIVE DEVELOPING COUNTRIES DEVELOPMENT AGENCY DEVELOPMENT ASSISTANCE DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISPUTE RESOLUTION DIVIDENDS DOMESTIC MARKET DUMPING DUOPOLY ECONOMIC INTEGRATION ECONOMIC SYSTEMS ECONOMIC THEORY ECONOMIES OF SCALE ELASTICITY ELASTICITY OF DEMAND ENERGY RESOURCES EQUILIBRIUM EQUILIBRIUM PRICE EXISTING INFRASTRUCTURE EXPORTERS EXPROPRIATION EXTERNALITIES FINANCIAL CRISIS FINANCIAL SUPPORT FIXED INVESTMENT FOREIGN FIRM FOREIGN FIRMS FOREIGN MARKET FREE TRADE FREE TRADE AGREEMENT GLOBAL INVESTMENT GLOBALIZATION GOVERNMENT BUDGET HOLDINGS IMPERFECT COMPETITION IMPORT QUOTAS INCOME INCOME LEVELS INDEBTED COUNTRIES INEFFICIENCY INFRASTRUCTURE DEVELOPMENT INFRASTRUCTURE INVESTMENT INFRASTRUCTURE PROJECTS INFRASTRUCTURES INSTRUMENT INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTING INVESTMENT CHOICE INVESTMENT CHOICES INVESTMENT REQUIREMENT JURISDICTION JUSTICE SYSTEMS LESS DEVELOPED COUNTRIES LOW-INCOME COUNTRIES MARGINAL COST MARGINAL COST PRICING MARGINAL COSTS MARKET ECONOMIES MARKET INTEGRATION MARKET POWER MARKET SHARE MARKET SHARES MARKET SIZE MARKET SIZES MARKET STRUCTURE MONOPOLY NATURAL RESOURCES OLIGOPOLISTIC MARKETS OLIGOPOLY OPEN ECONOMY OPEN MARKET OPPORTUNITY COST OPTIMAL INVESTMENT PARTICIPATION CONSTRAINT POLITICAL ECONOMY POSITIVE EXTERNALITIES POTENTIAL INVESTORS PRIVATIZATION PRODUCTION COSTS PROPERTY RIGHTS PUBLIC DEBT PUBLIC FUND PUBLIC FUNDS PUBLIC GOOD PUBLIC OWNERSHIP PUBLIC UTILITIES RAMSEY PRICE REDISTRIBUTIVE EFFECTS REGIONAL INTEGRATION REGIONAL POWER REGULATOR REGULATORS REGULATORY AUTHORITY REGULATORY BODIES REGULATORY BODY RESERVE RULE OF LAW SALES SHADOW PRICE SHAREHOLDERS SMALL COUNTRY SOCIAL COST SUSTAINABLE INVESTMENT TARIFF REVENUES TAX TAX RATE TAX RATES TAX STRUCTURE TAXATION TRADE LIBERALIZATION TRADING TRADING MARKET TRANSACTION TRANSACTION COSTS TRANSITION ECONOMIES TRANSPORT TRANSPORT CHARGES TRANSPORTATION TRANSPORTATION COST TRANSPORTATION COSTS TRANSPORTATION FACILITIES TRANSPORTATION INFRASTRUCTURE TRUE UNIFORM PRICE VALUATION VARIABLE COST WORLD DEVELOPMENT INDICATORS electricity investment regulation Auriol, Emmanuelle Biancini, Sara Powering Up Developing Countries through Integration?
relation	Policy Research Working Paper;No. 6494
description	Power market integration is analyzed in a two-country model with nationally regulated firms and costly public funds. If the generation costs between the two countries are too similar, negative business stealing outweighs efficiency gains so that the subsequent integration welfare decreases in both regions. Integration is welfare enhancing when the cost difference between two regions is large enough. The benefits from export profits increase the total welfare in the exporting country, whereas the importing country benefits from lower prices. In this case, market integration also improves incentives to invest compared to autarky. The investment levels remain inefficient, however, especially for transportation facilities. Free riding reduces incentives to invest in these public-good components of the network, whereas business stealing tends to decrease the capacity to finance new investment.
format	Publications & Research :: Policy Research Working Paper
author	Auriol, Emmanuelle Biancini, Sara
author_facet	Auriol, Emmanuelle Biancini, Sara
author_sort	Auriol, Emmanuelle
title	Powering Up Developing Countries through Integration?
title_short	Powering Up Developing Countries through Integration?
title_full	Powering Up Developing Countries through Integration?
title_fullStr	Powering Up Developing Countries through Integration?
title_full_unstemmed	Powering Up Developing Countries through Integration?
title_sort	powering up developing countries through integration?
publisher	World Bank, Washington, DC
publishDate	2013
url	http://documents.worldbank.org/curated/en/2013/06/17888008/powering-up-developing-countries-through-integration http://hdl.handle.net/10986/15852
_version_	1764431625636020224

Powering Up Developing Countries through Integration?

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