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...

Full description

Bibliographic Details
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

Description
Summary:	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.

Powering Up Developing Countries through Integration?

Similar Items