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, subsequent to integration, welfare decreases in both...

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Main Authors:	Auriol, Emmanuelle, Biancini, Sara
Format:	Journal Article
Language:	en_US
Published:	Oxford University Press on behalf of the World Bank 2016
Subjects:	economies of scale elasticity externalities infrastructure public utilities regional integration power market national regulation
Online Access:	http://hdl.handle.net/10986/24602

id	okr-10986-24602
recordtype	oai_dc
spelling	okr-10986-246022021-04-23T14:04:23Z Powering Up Developing Countries through Integration? Auriol, Emmanuelle Biancini, Sara economies of scale elasticity externalities infrastructure public utilities regional integration power market national 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, subsequent to 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 a lower price. In this case, market integration also improves incentives to invest compared to autarchy. 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. 2016-07-05T17:24:19Z 2016-07-05T17:24:19Z 2015-01 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/24602 en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Oxford University Press on behalf of the World Bank Publications & Research :: Journal Article Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	economies of scale elasticity externalities infrastructure public utilities regional integration power market national regulation
spellingShingle	economies of scale elasticity externalities infrastructure public utilities regional integration power market national regulation Auriol, Emmanuelle Biancini, Sara Powering Up Developing Countries through Integration?
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, subsequent to 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 a lower price. In this case, market integration also improves incentives to invest compared to autarchy. 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	Journal Article
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	Oxford University Press on behalf of the World Bank
publishDate	2016
url	http://hdl.handle.net/10986/24602
_version_	1764457158434357248

Powering Up Developing Countries through Integration?

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