IDEAS home Printed from https://ideas.repec.org/p/ags/idpmcr/30599.html
   My bibliography  Save this paper

Competition, Regulation and Privatisation of Electricity Generation in Developing Countries: Does the Sequencing of the Reforms Matter?

Author

Listed:
  • Zhang, Yingang
  • Parker, David
  • Kirkpatrick, Colin

Abstract

Recent years have seen countries introducing reform of their utility industries with a view to promoting private ownership and competition. This paper studies the effect of the sequencing of privatisation, competition and regulation reforms in electricity generation using data from 25 developing countries for the period 1985 to 2001. A fixed effects panel data model is used. The study finds that establishing an independent regulatory authority and introducing competition before privatisation is correlated with higher electricity generation, higher generation capacity and, in the case of the sequence of competition before privatisation, improved capital utilisation.

Suggested Citation

  • Zhang, Yingang & Parker, David & Kirkpatrick, Colin, 2004. "Competition, Regulation and Privatisation of Electricity Generation in Developing Countries: Does the Sequencing of the Reforms Matter?," Centre on Regulation and Competition (CRC) Working papers 30599, University of Manchester, Institute for Development Policy and Management (IDPM).
    • Handle: RePEc:ags:idpmcr:30599
    DOI: 10.22004/ag.econ.30599
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/30599/files/cr040062.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.30599?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
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brousseau,Eric & Glachant,Jean-Michel (ed.), 2002. "The Economics of Contracts," Cambridge Books, Cambridge University Press, number 9780521893138.
    2. von Hirschhausen, Christian R. & Opitz, Petra, 2001. "Power utility re-regulation in East European and CIS transformation countries (1990 - 1999): An institutional interpretation," Discussion Papers 2001/7, Technische Universität Berlin, School of Economics and Management.
    3. Martin Brownbridge & Colin Kirkpatrick, 1999. "Financial Sector Regulation: The Lessons of the Asian Crisis," Development Policy Review, Overseas Development Institute, vol. 17(3), pages 243-266, September.
    4. Máximo Torero & Alberto Pascó-Font, 2003. "The social impact of privatization and the regulation of utilities in Peru," Chapters, in: Cecilia Ugaz (ed.), Utility Privatization and Regulation, chapter 11, Edward Elgar Publishing.
    5. Gutierrez, Luis Hernando, 2003. "The Effect of Endogenous Regulation on Telecommunications Expansion and Efficiency in Latin America," Journal of Regulatory Economics, Springer, vol. 23(3), pages 257-286, May.
    6. D. Parker, 2002. "Economic Regulation: a review of issues," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 73(4), pages 493-519, December.
    7. Paul L. Joskow, 1998. "Electricity Sectors in Transition," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 25-52.
    8. Arocena, Pablo & Waddams Price, Catherine, 2002. "Generating efficiency: economic and environmental regulation of public and private electricity generators in Spain," International Journal of Industrial Organization, Elsevier, vol. 20(1), pages 41-69, January.
    9. Yin-Fang Zhang & David Parker & Colin Kirkpatrick, 2008. "Electricity sector reform in developing countries: an econometric assessment of the effects of privatization, competition and regulation," Journal of Regulatory Economics, Springer, vol. 33(2), pages 159-178, April.
    10. Schmitz, Patrick W, 2001. "The Hold-up Problem and Incomplete Contracts: A Survey of Recent Topics in Contract Theory," Bulletin of Economic Research, Wiley Blackwell, vol. 53(1), pages 1-17, January.
    11. David M. Newbery, 2002. "Privatization, Restructuring, and Regulation of Network Utilities," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640481, December.
    12. M. Dewatripont & G. Roland, 1992. "Economic Reform and Dynamic Political Constraints," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(4), pages 703-730.
    13. Reiner Martin & Isabel Vansteenkiste, 2001. "EU telecommunications and electricity markets—Heading towards price convergence?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 36(3), pages 131-140, May.
    14. R. Peter Lalor & Hernán García, 1996. "Reshaping Power Markets-Lessons from Chile and Argentina," World Bank Publications - Reports 11617, The World Bank Group.
    15. Sharkey,William W., 1983. "The Theory of Natural Monopoly," Cambridge Books, Cambridge University Press, number 9780521271943.
    16. Antonio Estache & MartÌn A. Rossi & Christian A. Ruzzier, 2004. "The Case for International Coordination of Electricity Regulation: Evidence from the Measurement of Efficiency in South America," Journal of Regulatory Economics, Springer, vol. 25(3), pages 271-295, May.
    17. Ada Karina Izaguirre, 1998. "Private Participation in the Electricity Sector : Recent Trends," World Bank Publications - Reports 11532, The World Bank Group.
    18. Gutierrez, Luis H. & Berg, Sanford, 2000. "Telecommunications liberalization and regulatory governance: lessons from Latin America," Telecommunications Policy, Elsevier, vol. 24(10-11), pages 865-884, November.
    19. Galal, Ahmed & Nauriyal, Bharat, 1995. "Regulating telecommunications in developing countries : outcomes, incentives, and commitment," Policy Research Working Paper Series 1520, The World Bank.
    20. Wallsten, Scott, 2002. "Does sequencing matter? regulation and privatization in telecommunications reforms," Policy Research Working Paper Series 2817, The World Bank.
    21. Newbery, David M., 1991. "Reform in Hungary : Sequencing and privatisation," European Economic Review, Elsevier, vol. 35(2-3), pages 571-580, April.
    22. Fink, Carsten & Mattoo, Aaditya & Rathindran, Randeep, 2003. "An assessment of telecommunications reform in developing countries," Information Economics and Policy, Elsevier, vol. 15(4), pages 443-466, December.
    23. Brousseau,Eric & Glachant,Jean-Michel (ed.), 2002. "The Economics of Contracts," Cambridge Books, Cambridge University Press, number 9780521814904.
    24. Gutierrez, Luis H., 2003. "Regulatory governance in the Latin American telecommunications sector," Utilities Policy, Elsevier, vol. 11(4), pages 225-240, December.
    25. Estache, Antonio & Guasch, Jose-Luis & Trujillo, Lourdes, 2003. "Price caps, efficiency payoffs, and infrastructure contract renegotiation in Latin America," Policy Research Working Paper Series 3129, The World Bank.
    26. Jalilian, Hossein & Kirkpatrick, Colin & Parker, David, 2003. "Creating the Conditions for International Business Expansion: The Impact of Regulation on Economic Growth in Developing Countries - A Cross-Country Analysis," Centre on Regulation and Competition (CRC) Working papers 30689, University of Manchester, Institute for Development Policy and Management (IDPM).
    27. Ada Karina Izaguirre, 2000. "Private Participation in Energy," World Bank Publications - Reports 11430, The World Bank Group.
    28. Wallsten Scott & Clarke George & Haggarty Luke & Kaneshiro Rosario & Noll Roger & Shirley Mary & Xu Lixin Colin, 2004. "New Tools for Studying Network Industry Reforms in Developing Countries: The Telecommunications and Electricity Regulation Database," Review of Network Economics, De Gruyter, vol. 3(3), pages 1-35, September.
    29. Preetum Domah & Michael Pollitt & Jon Stern, 2002. "Modelling the Costs of Electricity Regulation: Evidence of Human Resource Constraints in Developing Countries," Working Papers EP11, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    30. Li, Wei & Xu, Lixin Colin, 2002. "The Political Economy of Privatization and Competition: Cross-Country Evidence from the Telecommunications Sector," Journal of Comparative Economics, Elsevier, vol. 30(3), pages 439-462, September.
    31. David Parker & Colin Kirkpatrick, 2005. "Privatisation in Developing Countries: A Review of the Evidence and the Policy Lessons," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 513-541.
    32. Steinfeld,Edward S., 1998. "Forging Reform in China," Cambridge Books, Cambridge University Press, number 9780521633352.
    33. Toru Hattori, 2002. "Relative Performance of U.S. and Japanese Electricity Distribution: An Application of Stochastic Frontier Analysis," Journal of Productivity Analysis, Springer, vol. 18(3), pages 269-284, November.
    34. Christian von Hirschhausen & Petra Opitz, 2001. "Power Utility Re-regulation in East European and CIS Transformation Countries (1990-1999): An Institutional Interpretation," Discussion Papers of DIW Berlin 246, DIW Berlin, German Institute for Economic Research.
    35. Roland, Gerard, 1994. "On the Speed and Sequencing of Privatisation and Restructuring," Economic Journal, Royal Economic Society, vol. 104(426), pages 1158-1168, September.
    36. Spiller, Pablo T, 1996. "Institutions and Commitment," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 5(2), pages 421-452.
    37. M. Brownbridge & C. Kirkpatrick, 2000. "Financial Regulation in Developing Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 37(1), pages 1-24, October.
    38. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, December.
    39. Bitran, Eduardo & Serra, Pablo, 1998. "Regulation of privatized utilities: The Chilean experience," World Development, Elsevier, vol. 26(6), pages 945-962, June.
    40. Plane, Patrick, 1999. "Privatization, Technical Efficiency and Welfare Consequences: The Case of the Cote d'Ivoire Electricity Company (CIE)," World Development, Elsevier, vol. 27(2), pages 343-360, February.
    41. repec:reg:rpubli:124 is not listed on IDEAS
    42. 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.
    43. Scott J. Wallsten, 2001. "An Econometric Analysis of Telecom Competition, Privatization, and Regulation in Africa and Latin America," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 1-19, March.
    44. P. Cook, 1999. "Privatization and Utility Regulation in Developing Countries: the Lessons So Far," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 70(4), pages 549-587, December.
    45. I Grosfeld & P Hare, 1991. "Privatization in Hungary," CEP Discussion Papers dp0031, Centre for Economic Performance, LSE.
    46. J. Luis Guasch, 2004. "Granting and Renegotiating Infrastructure Concessions : Doing it Right," World Bank Publications - Books, The World Bank Group, number 15024, December.
    47. Faye Steiner, 2000. "Regulation, Industry Structure and Performance in the Electricity Supply Industry," OECD Economics Department Working Papers 238, OECD Publishing.
    48. Andrew N. Kleit & Dek Terrell, 2001. "Measuring Potential Efficiency Gains From Deregulation Of Electricity Generation: A Bayesian Approach," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 523-530, August.
    49. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
    50. Rodrigo Gutierrez & Pablo Serra & Ronald Fischer, 2003. "The Effects of Privatization on Firms and on Social Welfare: The Chilean Case," Research Department Publications 3150, Inter-American Development Bank, Research Department.
    51. Ronald Fischer & Rodrigo Gutiérrez & Pablo Serra, 2002. "The Effects of Privatization on Firms and on Social Welfare," Documentos de Trabajo 131, Centro de Economía Aplicada, Universidad de Chile.
    Full references (including those not matched with items on IDEAS)

    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. Yin-Fang Zhang & David Parker & Colin Kirkpatrick, 2008. "Electricity sector reform in developing countries: an econometric assessment of the effects of privatization, competition and regulation," Journal of Regulatory Economics, Springer, vol. 33(2), pages 159-178, April.
    2. Jamasb, T. & Mota, R. & Newbery, D. & Pollitt, M., 2004. "‘Electricity Sector Reform in Developing Countries: A Survey of Empirical Evidence on Determinants and Performance’," Cambridge Working Papers in Economics 0439, Faculty of Economics, University of Cambridge.
    3. Yin-Fang Zhang & David Parker & Colin Kirkpatrick, 2005. "Assessing the Effects of Privatisation, Competition and Regulation on Economic Performance : The Case of Electricity Sector Reform," Development Economics Working Papers 22589, East Asian Bureau of Economic Research.
    4. David Parker & Colin Kirkpatrick, 2005. "Privatisation in Developing Countries: A Review of the Evidence and the Policy Lessons," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 513-541.
    5. 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.
    6. Jamasb, Tooraj, 2006. "Between the state and market: Electricity sector reform in developing countries," Utilities Policy, Elsevier, vol. 14(1), pages 14-30, March.
    7. Yan Li, 2008. "Econometric Evidence on the Impacts of Privatization, New Entry, and Independent Industry Regulator on Mobile Network Penetration and Expansion," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2008-35, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    8. Li, Yan & Lyons, Bruce, 2012. "Market structure, regulation and the speed of mobile network penetration," International Journal of Industrial Organization, Elsevier, vol. 30(6), pages 697-707.
    9. Kirkpatrick, Colin & Parker, David, 2004. "Regulation and the Privatisation of Water Services in Developing Countries: Assessing the Impact of the General Agreement on Trade in Services (GATS)," Centre on Regulation and Competition (CRC) Working papers 30600, University of Manchester, Institute for Development Policy and Management (IDPM).
    10. Stern, Jon & Cubbin, John, 2005. "Regulatory effectiveness : the impact of regulation and regulatory governance arrangements on electricity industry outcomes," Policy Research Working Paper Series 3536, The World Bank.
    11. Jamasb, Tooraj & Pollitt, Michael, 2007. "Incentive regulation of electricity distribution networks: Lessons of experience from Britain," Energy Policy, Elsevier, vol. 35(12), pages 6163-6187, December.
    12. Filippo Belloc & Antonio Nicita, 2011. "Liberalization-Privatization Paths: Policies and Politics," Department of Economics University of Siena 609, Department of Economics, University of Siena.
    13. Calzada, Joan & Diaz-Serrano, Luis, 2023. "Conflicting national policies: The creation of the euro and the rebalancing of telecommunications prices," Telecommunications Policy, Elsevier, vol. 47(1).
    14. Parker, David & Kirkpatrick, Colin & Figueira-Theodorakopoulou, Catarina, 2008. "Infrastructure regulation and poverty reduction in developing countries: A review of the evidence and a research agenda," The Quarterly Review of Economics and Finance, Elsevier, vol. 48(2), pages 177-188, May.
    15. Gutierrez, Luis H., 2003. "Regulatory governance in the Latin American telecommunications sector," Utilities Policy, Elsevier, vol. 11(4), pages 225-240, December.
    16. Kirkpatrick, Colin & Parker, David & Zhang, Yin-Fang, 2004. "Foreign Direct Investment in Infrastructure in Developing Countries: Does Regulation Make a Difference?," Centre on Regulation and Competition (CRC) Working papers 30703, University of Manchester, Institute for Development Policy and Management (IDPM).
    17. Matthias Finger & Rolf W. Künneke (ed.), 2011. "International Handbook of Network Industries," Books, Edward Elgar Publishing, number 12961.
    18. Bastianin, Andrea & Castelnovo, Paolo & Florio, Massimo, 2018. "Evaluating regulatory reform of network industries: a survey of empirical models based on categorical proxies," Utilities Policy, Elsevier, vol. 55(C), pages 115-128.
    19. Adwoa Asantewaa & Tooraj Jamasb & Manuel Llorca, 2022. "Electricity Sector Reform Performance in Sub-Saharan Africa: A Parametric Distance Function Approach," Energies, MDPI, vol. 15(6), pages 1-29, March.
    20. Tooraj Jamasb & Rabindra Nepal & Govinda Timilsina & Michael Toman, 2014. "Energy Sector Reform, Economic Efficiency and Poverty Reduction," Discussion Papers Series 529, School of Economics, University of Queensland, Australia.

    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

    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:ags:idpmcr:30599. See general information about how to correct material in RePEc.

    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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/idmanuk.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.