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Modelling the Costs of Electricity Regulation: Evidence of Human Resource Constraints in Developing Countries

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Listed:
  • Preetum Domah
  • Pollitt, M.G.
  • Jon Stern

Abstract

Successful electricity industry reform depends on the presence of an appropriately staffed regulatory agency for the liberalised sector. However developing countries can have resource constraints that make the establishment of an effective regulatory agency difficult. This paper attempts an econometric modelling of staff numbers in electricity regulatory institutions. We specify a model of the determinants of staff numbers that reflects electricity system complexity as well as national economic and regulatory environments. We empirically estimate a translog cost function specification of the model using data on 60 electricity regulators collected from an international questionnaire survey in 2000-01. We conclude that there are significant differences between the regulatory cost functions of developed and developing countries and that, in establishing independent regulatory agencies, developing countries face high fixed costs relative to market size.

Suggested Citation

  • Preetum Domah & Pollitt, M.G. & Jon Stern, 2002. "Modelling the Costs of Electricity Regulation: Evidence of Human Resource Constraints in Developing Countries," Cambridge Working Papers in Economics 0229, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:0229
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    File URL: http://www.econ.cam.ac.uk/electricity/publications/wp/ep11.pdf
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    References listed on IDEAS

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    1. Stern, Jon & Holder, Stuart, 1999. "Regulatory governance: criteria for assessing the performance of regulatory systems: An application to infrastructure industries in the developing countries of Asia," Utilities Policy, Elsevier, vol. 8(1), pages 33-50, March.
    2. Roger Noll, 1999. "The Economics and Politics of the Slowdown in Regulatory Reform," Books, American Enterprise Institute, number 53371.
    3. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Governance matters," Policy Research Working Paper Series 2196, The World Bank.
    4. Shang-Jin Wei, 2000. "Natural openness and good government," Policy Research Working Paper Series 2411, The World Bank.
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    6. Spiller, Pablo T, 1996. "Institutions and Commitment," Industrial and Corporate Change, Oxford University Press, vol. 5(2), pages 421-452.
    7. Witold Jerzy Henisz, 2004. "Political Institutions and Policy Volatility," Economics and Politics, Wiley Blackwell, vol. 16(1), pages 1-27, March.
    8. Braeutigam, Ronald R & Panzar, John C, 1993. "Effects of the Change from Rate-of-Return to Price-Cap Regulation," American Economic Review, American Economic Association, vol. 83(2), pages 191-198, May.
    9. Guasch, J Luis & Hahn, Robert W, 1999. "The Costs and Benefits of Regulation: Implications for Developing Countries," World Bank Research Observer, World Bank Group, vol. 14(1), pages 137-158, February.
    10. Estache, Antonio & Martimort, David, 1999. "Politics, transaction costs, and the design of regulatory institutions," Policy Research Working Paper Series 2073, The World Bank.
    11. Estache, Antonio & Rodriguez-Pardina, Martin, 1999. "Light and lightning at the end of the public tunnel : reform of the electricity sector in the Southern Cone," Policy Research Working Paper Series 2074, The World Bank.
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    More about this item

    Keywords

    Electricity Regulation; International Comparisons; Human Resources;

    JEL classification:

    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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