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Bribes, bureaucracies, and blackouts: Towards understanding how corruption at the firm level impacts electricity reliability

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  • Pless, Jacquelyn
  • Fell, Harrison

Abstract

This paper looks at whether bribes for electricity connections affect electricity reliability. Using detailed firm-level data, we estimate various specifications based upon repeated cross-sections and means-based pseudo-panels to show that bribes are closely related to poorer electricity reliability. We find that the propensity to bribe for an electricity connection is associated with an increase of 14 power outages per month and a 22% increase in annual sales lost due to power outages on average. The results parallel a tragedy of the commons story: electricity, which exhibits common-pool resource characteristics, suffers from overexploitation as self-interested individual firms rationally bribe for electricity, creating negative impacts in aggregate on the overall quality of the resource. Given the importance of electricity reliability for economic growth and development, the findings imply that improving oversight and enforcement measures at the consumer level that target the reduction of bribery for electricity connections could contribute to growth and development.

Suggested Citation

  • Pless, Jacquelyn & Fell, Harrison, 2017. "Bribes, bureaucracies, and blackouts: Towards understanding how corruption at the firm level impacts electricity reliability," Resource and Energy Economics, Elsevier, vol. 47(C), pages 36-55.
  • Handle: RePEc:eee:resene:v:47:y:2017:i:c:p:36-55
    DOI: 10.1016/j.reseneeco.2016.11.001
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    Citations

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    Cited by:

    1. Adewuyi, Adeolu & Emmanuel, Zachariah, 2018. "Electricity Outages and Firm Performance Across the Six Geo-Political Zones in Nigeria: The Role of Corruption," MPRA Paper 92089, University Library of Munich, Germany, revised 03 Feb 2019.
    2. repec:eee:appene:v:223:y:2018:i:c:p:443-456 is not listed on IDEAS
    3. Islam, Asif & Hyland, Marie, 2019. "The drivers and impacts of water infrastructure reliability – a global analysis of manufacturing firms," Ecological Economics, Elsevier, vol. 163(C), pages 143-157.
    4. Paudel, Jayash, 2016. "Community-Managed Forests and Household Welfare: Empirical Evidence from Nepal," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235481, Agricultural and Applied Economics Association.
    5. repec:gam:jeners:v:10:y:2017:i:9:p:1247-:d:109373 is not listed on IDEAS
    6. Adewuyi, Adeolu & Emmanuel, Zachariah, 2018. "Electricity Outages and Firm Performance Across the Six Geo-Political Zones in Nigeria: The Role of Corruption," MPRA Paper 92091, University Library of Munich, Germany, revised 04 Feb 2019.
    7. Rohan Best & Paul J. Burke, 2017. "The Importance of Government Effectiveness for Transitions toward Greater Electrification in Developing Countries," Energies, MDPI, Open Access Journal, vol. 10(9), pages 1-17, August.

    More about this item

    Keywords

    Corruption; Electricity; Reliability; Quality of government; Institutions; Common-pool resource;

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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