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Power Outages, its Economic Cost and Firm Performance: Evidence from Ethiopia

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  • Lamessa Tariku ABDISA

Abstract

Unreliable supply of electricity is the main constraints to doing business in Ethiopia. This paper examined how firms in Ethiopia respond to power outage employing the World Bank Enterprise Survey data. The result shows that, in response to power outages, firms in Ethiopia self-generate electricity. While there is no evidence suggesting outsourcing and improved energy hypothesis, power outages were found to affect the firms’ productivity negatively. From 2011 to 2015 firms’ cost of production rose by 15% due to power outage. This effect varies positively with output level suggesting that outage is costly particularly for large firms.

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  • Lamessa Tariku ABDISA, 2018. "Power Outages, its Economic Cost and Firm Performance: Evidence from Ethiopia," Departmental Working Papers 2018-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2018-01
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    References listed on IDEAS

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    More about this item

    Keywords

    Power Outages; Firm; Self Generation; Ethiopia;
    All these keywords.

    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • N77 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Africa; Oceania
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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