IDEAS home Printed from https://ideas.repec.org/a/bla/annpce/v80y2009i4p641-664.html
   My bibliography  Save this article

Limits To Competition And Regulation In Privatized Electricity Markets

Author

Listed:
  • Hulya Dagdeviren

Abstract

ABSTRACT**: Privatization of electricity has been extensive both in the developed and the developing world. Failures in various areas have led to the emergence of a new consensus which regards competitive pressures and regulation as crucial for utility privatizations to work. This review paper presents a critical evaluation of this newly found wisdom with reference to the developing economies. The experience in the developed world, especially in the USA and the UK, has been used to draw conclusions for the developing economies. Overall, the paper highlights the problems associated with the ‘competitive model’ both in the developed and developing world and points to the potential instability in private competitive power supply systems. It also examines the degree to which regulation can be a panacea for market failures and structural problems under private provision.

Suggested Citation

  • Hulya Dagdeviren, 2009. "Limits To Competition And Regulation In Privatized Electricity Markets," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 80(4), pages 641-664, December.
  • Handle: RePEc:bla:annpce:v:80:y:2009:i:4:p:641-664
    DOI: 10.1111/j.1467-8292.2009.00395.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-8292.2009.00395.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1467-8292.2009.00395.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. del Sol, Patricio, 2002. "Responses to electricity liberalization: the regional strategy of a Chilean generator," Energy Policy, Elsevier, vol. 30(5), pages 437-446, April.
    2. Paul Joskow, 2003. "Electricity Sector Restructuring and Competition: Lessons Learned," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(121), pages 548-558.
    3. Paul L. Joskow, 2001. "California's Electricity Crisis," Oxford Review of Economic Policy, Oxford University Press, vol. 17(3), pages 365-388.
    4. Smith, Michael D., 2002. "Lessons to Be Learned from California and Enron for Restructuring Electricity Markets," The Electricity Journal, Elsevier, vol. 15(7), pages 23-32.
    5. Wamukonya, Njeri, 2003. "Power sector reform in developing countries: mismatched agendas," Energy Policy, Elsevier, vol. 31(12), pages 1273-1289, September.
    6. Stauffer, Hoff, 2006. "Capacity Markets and Market Stability," The Electricity Journal, Elsevier, vol. 19(3), pages 75-80, April.
    7. Barbose, Galen & Goldman, Charles & Neenan, Bernie, 2006. "The Role of Demand Response in Default Service Pricing," The Electricity Journal, Elsevier, vol. 19(3), pages 64-74, April.
    8. Neuhoff, Karsten & De Vries, Laurens, 2004. "Insufficient incentives for investment in electricity generations," Utilities Policy, Elsevier, vol. 12(4), pages 253-267, December.
    9. David E. M. Sappington & Joseph E. Stiglitz, 1987. "Privatization, information and incentives," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 6(4), pages 567-585.
    10. Antonio Estache, 2006. "PPI divorces vs. PPI partnerships in Infrastructure," ULB Institutional Repository 2013/43914, ULB -- Universite Libre de Bruxelles.
    11. Kelly, Susan & Moody, Diane, 2005. "Wholesale Electric Restructuring: Was 2004 the "Tipping Point"?," The Electricity Journal, Elsevier, vol. 18(2), pages 11-18, March.
    12. Sanford Berg & Chen Lin & Valeriy Tsaplin, 2005. "Regulation of State-Owned and Privatized Utilities: Ukraine Electricity Distribution Company Performance," Journal of Regulatory Economics, Springer, vol. 28(3), pages 259-287, November.
    13. Hunt, Sally, 2002. "The State of U.S. Electricity Restructuring," The Electricity Journal, Elsevier, vol. 15(5), pages 11-19, June.
    14. David Parker & Colin Kirkpatrick, 2004. "Economic regulation in developing countries: a framework for critical analysis," Chapters, in: Paul Cook & Colin Kirkpatrick & Martin Minogue & David Parker (ed.), Leading Issues in Competition, Regulation and Development, chapter 4, Edward Elgar Publishing.
    15. Dubash, Navroz K. & Rao, D. Narasimha, 2008. "Regulatory practice and politics: Lessons from independent regulation in Indian electricity," Utilities Policy, Elsevier, vol. 16(4), pages 321-331, December.
    16. Gert Brunekreeft and Sven Twelemann, 2005. "Regulation, Competition and Investment in the German Electricity Market: RegTP or REGTP," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 99-126.
    17. Reeder, Mark, 2006. "Want to Put an End to Capacity Markets? Think Real-Time Pricing," The Electricity Journal, Elsevier, vol. 19(6), pages 38-48, July.
    18. Oliver Hart, 2003. "Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships," Economic Journal, Royal Economic Society, vol. 113(486), pages 69-76, March.
    19. J. Guasch & Jean-Jacques Laffont & Stéphane Straub, 2006. "Renegotiation of Concession Contracts: A Theoretical Approach," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 29(1), pages 55-73, September.
    20. da Silva, Luis Correia & Estache, Antonio & Jarvela, Sakari, 2004. "Is debt replacing equity in regulated privatized infrastructure in developing countries?," Policy Research Working Paper Series 3374, The World Bank.
    21. Antonio Estache, 2006. "PPI Partnerships vs. PPI Divorces in LDCs," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 29(1), pages 3-26, September.
    22. Newbery, David M., 2004. "Regulation and competition policy: longer-term boundaries," Utilities Policy, Elsevier, vol. 12(2), pages 93-95, June.
    23. Roques Fabien A. & Newbery David M. & Nuttall William J., 2005. "Investment Incentives and Electricity Market Design: the British Experience," Review of Network Economics, De Gruyter, vol. 4(2), pages 1-36, June.
    24. Andrew Sweeting, 2007. "Market Power In The England And Wales Wholesale Electricity Market 1995-2000," Economic Journal, Royal Economic Society, vol. 117(520), pages 654-685, April.
    25. Haselip, James, 2005. "Renegotiating Electricity Contracts after an Economic Crisis and Currency Devaluation: The Case of Argentina," The Electricity Journal, Elsevier, vol. 18(3), pages 78-88, April.
    26. David Martimort, 2006. "An Agency Perspective on the Costs and Benefits of Privatization," Journal of Regulatory Economics, Springer, vol. 30(1), pages 5-44, July.
    27. John Cubbin & Jon Stern, 2006. "The Impact of Regulatory Governance and Privatization on Electricity Industry Generation Capacity in Developing Economies," World Bank Economic Review, World Bank Group, vol. 20(1), pages 115-141.
    28. Brunekreeft, G. & Twelemann, S., 2005. "Regulation, Competition and Investment in the German Electricity Market: RegTP or REGTP," Cambridge Working Papers in Economics 0501, Faculty of Economics, University of Cambridge.
    29. Bell, Matthew, 2003. "Regulation in developing countries is different: avoiding negotiation, renegotiation and frustration," Energy Policy, Elsevier, vol. 31(4), pages 299-305, March.
    30. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1127-1161.
    31. Severin Borenstein, 2002. "The Trouble With Electricity Markets: Understanding California's Restructuring Disaster," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 191-211, Winter.
    32. Martin Minogue & Ledivina Cari-o, 2006. "Introduction: Regulatory Governance in Developing Countries," Chapters, in: Martin Minogue & Ledivina Cariño (ed.), Regulatory Governance in Developing Countries, chapter 1, Edward Elgar Publishing.
    33. repec:hrv:faseco:30727607 is not listed on IDEAS
    34. Moody, Diane C., 2004. "Ten years of experience with deregulating US power markets," Utilities Policy, Elsevier, vol. 12(3), pages 127-137, September.
    35. Hopper, Nicole & Goldman, Charles & Neenan, Bernie, 2006. "Demand Response from Day-Ahead Hourly Pricing for Large Customers," The Electricity Journal, Elsevier, vol. 19(3), pages 52-63, April.
    36. Ralph Turvey, 2006. "Short & long run transmission incentives for generation location," Working Papers 0604, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
    37. Besser, Janet Gail & Farr, John G. & Tierney, Susan F., 2002. "The Political Economy of Long-Term Generation Adequacy: Why an ICAP Mechanism is Needed as Part of Standard Market Design," The Electricity Journal, Elsevier, vol. 15(7), pages 53-62.
    38. Corria da Silva, Luis & Estache, Antonio & Jarvela, Sakari, 2006. "Is debt replacing equity in regulated privatised infrastructure in LDCs?," Utilities Policy, Elsevier, vol. 14(2), pages 90-102, June.
    39. Newbery, David M., 2002. "Problems of liberalising the electricity industry," European Economic Review, Elsevier, vol. 46(4-5), pages 919-927, May.
    40. Lave, Lester B. & Apt, Jay & Blumsack, Seth, 2004. "Rethinking Electricity Deregulation," The Electricity Journal, Elsevier, vol. 17(8), pages 11-26, October.
    41. Kelly, John M., 2003. "The Missing Manifesto: What Economists Should Be Saying about Electric Utility Restructuring in the United States," The Electricity Journal, Elsevier, vol. 16(1), pages 13-24.
    42. Pollitt, Michael, 2005. "The role of efficiency estimates in regulatory price reviews: Ofgem's approach to benchmarking electricity networks," Utilities Policy, Elsevier, vol. 13(4), pages 279-288, December.
    43. Navarro, Peter & Shames, Michael, 2003. "Aftershocks--And Essential Lessons--From the California Electricity Debacle," The Electricity Journal, Elsevier, vol. 16(4), pages 24-30, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Antonio Estache & Caroline Philippe, 2012. "The Impact of Private Participation in Infrastructure in Developing Countries: Taking Stock of about 20 Years of Experience," Working Papers ECARES ECARES 2012-043, ULB -- Universite Libre de Bruxelles.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hulya Dagdeviren, 2011. "Political Economy Of Contractual Disputes In Private Water And Sanitation:Lessons From Argentina," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 82(1), pages 25-44, March.
    2. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
    3. David Martimort & Flavio Menezes & Myrna Wooders & ELISABETTA IOSSA & DAVID MARTIMORT, 2015. "The Simple Microeconomics of Public-Private Partnerships," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(1), pages 4-48, February.
    4. Simshauser, Paul, 2010. "Vertical integration, credit ratings and retail price settings in energy-only markets: Navigating the Resource Adequacy problem," Energy Policy, Elsevier, vol. 38(11), pages 7427-7441, November.
    5. Daniel Danau & Annalisa Vinella, 2017. "From fixed to state‐dependent duration in public‐private partnerships," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(3), pages 636-660, September.
    6. Yu, W. & Pollitt, M.G., 2009. "Does Liberalisation cause more Electricity Blackouts? Evidence from a Global Study of Newspaper Reports," Cambridge Working Papers in Economics 0911, Faculty of Economics, University of Cambridge.
    7. Simshauser, Paul & Tian, Yuan & Whish-Wilson, Patrick, 2015. "Vertical integration in energy-only electricity markets," Economic Analysis and Policy, Elsevier, vol. 48(C), pages 35-56.
    8. Pierre M. Picard & Ridwan D. Rusli, 2018. "State‐owned firms and private debt," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(5), pages 672-702, October.
    9. Birgitte Grøgaard & Asmund Rygh & Gabriel R. G. Benito, 2019. "Bringing corporate governance into internalization theory: State ownership and foreign entry strategies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(8), pages 1310-1337, October.
    10. Fay, Marianne & Martimort, David & Straub, Stéphane, 2021. "Funding and financing infrastructure: The joint-use of public and private finance," Journal of Development Economics, Elsevier, vol. 150(C).
    11. Simshauser, P., 2020. "Merchant utilities and boundaries of the firm: vertical integration in energy-only markets," Cambridge Working Papers in Economics 2039, Faculty of Economics, University of Cambridge.
    12. Perotti,Enrico C., 2004. "State ownership - a residual role?," Policy Research Working Paper Series 3407, The World Bank.
    13. Simshauser, Paul, 2019. "Missing money, missing policy and Resource Adequacy in Australia's National Electricity Market," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.
    14. Ehtisham Ahmad & Annalisa Vinella & Kezhou Xiao, 2018. "Contracting arrangements and public private partnerships for sustainable development," Public Sector Economics, Institute of Public Finance, vol. 42(2), pages 145-169.
    15. Eero Lehto, 2006. "The Choice Between the In-house Provision and the Competitive Out-house Provision of Public Services," Working Papers 216, Palkansaajien tutkimuslaitos, Labour Institute for Economic Research.
    16. Gencer, Busra & Larsen, Erik Reimer & van Ackere, Ann, 2020. "Understanding the coevolution of electricity markets and regulation," Energy Policy, Elsevier, vol. 143(C).
    17. Antonio Estache & Liam Wren-Lewis, 2009. "Toward a Theory of Regulation for Developing Countries: Following Jean-Jacques Laffont's Lead," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 729-770, September.
    18. Bogart, Dan & Chaudhary, Latika, 2015. "Off the rails: Is state ownership bad for productivity?," Journal of Comparative Economics, Elsevier, vol. 43(4), pages 997-1013.
    19. Carlo Cambini & Laura Rondi, 2010. "Regulatory Independence and Political Interference: Evidence from EU Mixed-Ownership Utilities’ Investment and Debt," Working Papers 2010.69, Fondazione Eni Enrico Mattei.
    20. Woo, C.K. & Chen, Y. & Olson, A. & Moore, J. & Schlag, N. & Ong, A. & Ho, T., 2017. "Electricity price behavior and carbon trading: New evidence from California," Applied Energy, Elsevier, vol. 204(C), pages 531-543.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:annpce:v:80:y:2009:i:4:p:641-664. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1370-4788 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1370-4788 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.