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Have consumers benefited from the reforms in the electricity distribution sector in Latin America?

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  • Estache, Antonio
  • Rossi, Martin

Abstract

The authors bring new empirical evidence on the impact of the choice of ownership and regulatory regime on firms'productivity and prices paid by consumers. They collect the evidence from a sample of electricity distribution companies in Latin America. The authors rely on estimations of labor and operation and maintenance (O&M) input requirement functions using alternative econometric approaches. Their main conclusions are: 1) Private firms perform better (approximately 30 percent) than public firms. 2) The regulatory regimes matter, so that price-cap regulated firms do better than rate-of-return regulated firms, and firms regulated under hybrid regimes have intermediate performance. 3) Private firms operating under rate of return are at most as efficient as public firms. 4) There is no clear pattern of differences in electricity prices according to the regulatory regime. 5) Final prices fell in general but the drop did not match the productivity gains, implying that the operators and the state share some of the gains in the form of rents and higher tax revenue, respectively.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3420.

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Date of creation: 01 Oct 2004
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Handle: RePEc:wbk:wbrwps:3420

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Related research

Keywords: Economic Theory&Research; Labor Policies; Public Sector Economics&Finance; Environmental Economics&Policies; Markets and Market Access; Public Sector Economics&Finance; Environmental Economics&Policies; Economic Theory&Research; Business in Development; Business Environment;

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References

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  1. Pablo Serra & Ronald Fischer, 2000. "Regulating the Electricity Sector in Latin America," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  2. Kridel, Donald J & Sappington, David E M & Weisman, Dennis L, 1996. "The Effects of Incentive Regulation in the Telecommunications Industry: A Survey," Journal of Regulatory Economics, Springer, vol. 9(3), pages 269-306, May.
  3. Kumbhakar, Subal C. & Hjalmarsson, Lennart, 1998. "Relative performance of public and private ownership under yardstick competition: electricity retail distribution," European Economic Review, Elsevier, vol. 42(1), pages 97-122, January.
  4. Battese, George E. & Corra, Greg S., 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(03), December.
  5. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  6. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
  7. Kodde, David A & Palm, Franz C, 1986. "Wald Criteria for Jointly Testing Equality and Inequality Restriction s," Econometrica, Econometric Society, vol. 54(5), pages 1243-48, September.
  8. Manuel Dussan, 1996. "Electric Power Sector Reform in Latin America and the Caribbean," IDB Publications 46878, Inter-American Development Bank.
  9. Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790, December.
  10. Bagdadioglu, Necmiddin & Waddams Price, Catherine M. & Weyman-Jones, Thomas G., 1996. "Efficiency and ownership in electricity distribution: A non-parametric model of the Turkish experience," Energy Economics, Elsevier, vol. 18(1-2), pages 1-23, April.
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Citations

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Cited by:
  1. Jamasb, Tooraj, 2006. "Between the state and market: Electricity sector reform in developing countries," Utilities Policy, Elsevier, vol. 14(1), pages 14-30, March.
  2. Montufar Helu Jiménez, Alejandro, 2013. "Reformas en la producción y distribución eléctrica y su relación con el sector manufacturero: el impacto de la sustitución de Luz y Fuerza del Centro por la Comisión Federal de Electricidad," MPRA Paper 49507, University Library of Munich, Germany.
  3. Andres, Luis & Guasch, Jose Luis & Azumendi, Sebastian Lopez, 2008. "Regulatory governance and sector performance : methodology and evaluation for Electricity distribution in Latin America," Policy Research Working Paper Series 4494, The World Bank.
  4. Andres, Luis & Foster, Vivien & Guasch, Jose Luis, 2006. "The impact of privatization on the performance of the infrastructure sector : the case of electricity distribution in Latin American countries," Policy Research Working Paper Series 3936, The World Bank.
  5. Luis A. Andrés & J. Luis Guasch & Thomas Haven & Vivien Foster, 2008. "The Impact of Private Sector Participation in Infrastructure : Lights, Shadows, and the Road Ahead," World Bank Publications, The World Bank, number 6545, October.

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