A key characteristic of regulatory schemes in Latin America is its virtual absence of mechanisms for coping with outages in the supply of public utilities. This paper presents such a mechanism, which has the advantage of being complementary to the medium and long run incentives that ought to be present on the regulation. We show that this mechanism is more efficient that the rationing scheme recently implemented in Chile for which we quantify its enormous costs. Furthermore, our proposal cannot be challenged on redistributive grounds.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
Find related papers by JEL classification: L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
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