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Regulatory governance and chile's 1998-1999 electricity shortage

  • Ronald Fischer
  • Alexander Galetovic

We study regulatory incentives and governance during the 1998-1999 electricity shortage in Chile. We argue that it was feasible to manage the shortage with no outages. The outages can be blamed on the rigid price system and deficiencies in regulatory governance, which led to a weak regulator unable to make the price system work. The shortage shows the limitations of a rigid price system requiring regulatory intervention. It suggests that countries where governance structures are weak should rely as much as possible on market rules that clearly allocate property rights and leave contract terms to be freely negotiated by private parties.

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Article provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.

Volume (Year): 6 (2003)
Issue (Month): 2 ()
Pages: 105-125

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Handle: RePEc:taf:jpolrf:v:6:y:2003:i:2:p:105-125
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  1. Federico Basañes & Eduardo Saavedra & Raimundo Soto, . "Post-Privatization Renegotiations and Disputes in Chile," ILADES-Georgetown University Working Papers inv117, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
  2. Serra, Pablo J., 1997. "Energy pricing under uncertain supply," Energy Economics, Elsevier, vol. 19(2), pages 209-223, May.
  3. Sanghvi, Arun P., 1983. "Optimal electricity supply reliability using customer shortage costs," Energy Economics, Elsevier, vol. 5(2), pages 129-136, April.
  4. Serra, Pablo & Fierro, Gabriel, 1997. "Outage costs in Chilean industry," Energy Economics, Elsevier, vol. 19(4), pages 417-434, October.
  5. Bernstein, Sebastian & Agurto, Renato, 1992. "Use of outage cost for electricity pricing in Chile," Utilities Policy, Elsevier, vol. 2(4), pages 299-302, October.
  6. Nesbakken, Runa, 1999. "Price sensitivity of residential energy consumption in Norway," Energy Economics, Elsevier, vol. 21(6), pages 493-515, December.
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