Powering up developing countries through integration ?
AbstractPower 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 6494.
Date of creation: 01 Jun 2013
Date of revision:
Transport Economics Policy&Planning; Economic Theory&Research; Debt Markets; Markets and Market Access; Emerging Markets;
Other versions of this item:
- Emmanuelle Auriol & Sara Biancini, 2012. "Powering Up Developing Countries through Integration?," CESifo Working Paper Series 3872, CESifo Group Munich.
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- F15 - International Economics - - Trade - - - Economic Integration
- R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-24 (All new papers)
- NEP-DEV-2013-06-24 (Development)
- NEP-REG-2013-06-24 (Regulation)
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.:
- AURIOL, Emmanuelle & PICARD, Pierre M., .
"Infrastructure and public utilities privatization in developing countries,"
CORE Discussion Papers RP
-2180, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Emmanuelle Auriol & Pierre M. Picard, 2008. "Infrastructure and Public Utilities Privatization in Developing Countries," World Bank Economic Review, World Bank Group, vol. 23(1), pages 77-100, November.
- Auriol, Emmanuelle & Picard, Pierre M., 2009. "Infrastructure and Public Utilities Privatization in Developing Countries," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
- Auriol, Emmanuelle & Picard, Pierre M, 2006. "Infrastructure and Public Utilities Privatization in Developing Countries," CEPR Discussion Papers 6018, C.E.P.R. Discussion Papers.
- Auriol, Emmanuelle & Picard, Pierre M., 2006. "Infrastructure and public utilities privatization in developing countries," Policy Research Working Paper Series 3950, The World Bank.
- Besley, Timothy J. & Ghatak, Maitreesh, 2001.
"Government versus Private Ownership of Public Goods,"
CEPR Discussion Papers
2725, C.E.P.R. Discussion Papers.
- Timothy Besley & Maitreesh Ghatak, 2001. "Government Versus Private Ownership Of Public Goods," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1343-1372, November.
- Antonio Estache & A. Iimi, 2008.
"Procurement Efficiency for Infrastructure Development and Financial Needs Reassessed,"
Working Papers ECARES
2008_022, ULB -- Universite Libre de Bruxelles.
- Estache, Antonio & Iimi, Atsushi, 2008. "Procurement efficiency for infrastructure development and financial needs reassessed," Policy Research Working Paper Series 4662, The World Bank.
- Estache, Antonio & Perelman, Sergio & Trujillo, Lourdes, 2005. "Infrastructure performance and reform in developing and transition economies: evidence from a survey of productivity measures," Policy Research Working Paper Series 3514, The World Bank.
- Collie, David R., 2000. "State aid in the European Union: The prohibition of subsidies in an integrated market," International Journal of Industrial Organization, Elsevier, vol. 18(6), pages 867-884, August.
- Auriol, Emmanuelle, 1998.
"Deregulation and quality,"
International Journal of Industrial Organization,
Elsevier, vol. 16(2), pages 169-194, March.
- Auriol, Emmanuelle, 1997. "Deregulation and Quality," IDEI Working Papers 69, Institut d'Économie Industrielle (IDEI), Toulouse.
- Auriol, Emmanuelle, 1998. "Deregulation and Quality," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
- Leahy, Dermot & Neary, J Peter, 2007.
"Multilateral Subsidy Games,"
CEPR Discussion Papers
6479, C.E.P.R. Discussion Papers.
- Caillaud, Bernard, 1990. "Regulation, competition, and asymmetric information," Journal of Economic Theory, Elsevier, vol. 52(1), pages 87-110, October.
- Neary, J. Peter, 1994.
"Cost asymmetries in international subsidy games: Should governments help winners or losers?,"
Journal of International Economics,
Elsevier, vol. 37(3-4), pages 197-218, November.
- Neary, J Peter, 1991. "Cost Asymmetries in International Subsidy Games: Should Governments Help Winners or Losers?," CEPR Discussion Papers 560, C.E.P.R. Discussion Papers.
- Pineau, Pierre-Olivier & Hira, Anil & Froschauer, Karl, 2004. "Measuring international electricity integration: a comparative study of the power systems under the Nordic Council, MERCOSUR, and NAFTA," Energy Policy, Elsevier, vol. 32(13), pages 1457-1475, September.
- Snow, Arthur & Warren, Ronald Jr., 1996. "The marginal welfare cost of public funds: Theory and estimates," Journal of Public Economics, Elsevier, vol. 61(2), pages 289-305, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.