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The political economy of public utilities: A study of the power sector

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Author Info
K.P. Kannan (Centre for Development Studies)
N. Vijayamohanan Pillai (Centre for Development Studies)
Abstract

In this paper, we attempt at an analysis of the political economy of the Indian power sector with special reference to Kerala in the light of a generic model of the political economy of public utilities we develop in the first part of the paper. The model seeks to explain the political economy of the rent seeking drives in a non-Smithian imperfect regime of self-interest maximisation, with a regulatory structure of the public utility described in a framework of the principal-agent relationship. In contrast to the usual neo-classical monolithic representation of principal and agent, we characterise each entity in a Marxian-Kaleckian vein, as a composite set of conflicting sectional interests. This helps us develop a comprehensive perspective of the politico-economic implications of the relationship among the public, government and utility. Based on this generic model, we seek to analyse, in the second part of the paper, the political economy of the power sector in India, with emphasis on Kerala. We also attempt, wherever possible, to estimate the costs of corruption involved in the administration of the power sector.

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Paper provided by Centre for Development Studies, Trivendrum, India in its series Centre for Development Studies, Trivendrum Working Papers with number 316.

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Length: 80 pages
Date of creation: Jun 2001
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Handle: RePEc:ind:cdswpp:316

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Keywords: India political economy rent seeking principal-agent public utility power sector

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Find related papers by JEL classification:
E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Institutional; Evolutionary
H10 - Public Economics - - Structure and Scope of Government - - - General
H4 - Public Economics - - Publicly Provided Goods
L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
N4 - Economic History - - Government, War, Law, and Regulation
P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Jean Tirole, 1985. "Hierarchies and Bureaucracies," Working papers 363, Massachusetts Institute of Technology (MIT), Department of Economics.
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  4. Morris Sebastian, 1996. "The Political Economy of Electric Power in India," IIMA Working Papers 1294, Indian Institute of Management Ahmedabad, Research and Publication Department.
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  7. Laffont, Jean-Jacques, 1990. "Analysis of Hidden Gaming in a Three-Level Hierarchy," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(2), pages 301-24, Fall.
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  12. Laffont, Jean-Jacques, 1988. "Hidden Gaming in Hierarchies: Facts and Models," The Economic Record, The Economic Society of Australia, vol. 64(187), pages 295-306, December.
  13. Krueger, Anne O, 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, American Economic Association, vol. 64(3), pages 291-303, June. [Downloadable!] (restricted)
  14. Tollison, Robert D, 1982. "Rent Seeking: A Survey," Kyklos, Blackwell Publishing, vol. 35(4), pages 575-602.
  15. James A. Mirrlees, 1976. "The Optimal Structure of Incentives and Authority Within an Organization," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 105-131, Spring. [Downloadable!] (restricted)
  16. Bengt Holmstrom, 1979. "Moral Hazard and Observability," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 74-91, Spring. [Downloadable!] (restricted)
  17. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. K.P. Kannan & N. Vijayaymohanan Pillai, 2002. "The aetiology of the inefficiency syndrome in the Indian power sector: Main issues and conclusions of a study," Centre for Development Studies, Trivendrum Working Papers 324, Centre for Development Studies, Trivendrum, India. [Downloadable!]
  2. N. Vijayamohanan Pillai & K.P. Kannan, 2001. "Time and cost over-runs of the power projects in Kerala," Centre for Development Studies, Trivendrum Working Papers 320, Centre for Development Studies, Trivendrum, India. [Downloadable!]
  3. K.P. Kannan & N. Vijayamohanan Pillai, 2004. "Development as a right to freedom: An interpretation of the 'Kerala Model'," Centre for Development Studies, Trivendrum Working Papers 361, Centre for Development Studies, Trivendrum, India. [Downloadable!]
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