IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Why manufacturing firms produce some electricity internally

  • Kyu Sik Lee
  • Anas, Alex
  • Verma, Satyendra
  • Murray, Michael

Many manufacturers in developing countries produce their own electricity because the public supply is unavailable or unreliable. The authors develop a model of the firm in which electricity is produced internally, with scale economies. The model explains the observed behavior (prevalent in Nigeria, common in Indonesia, and rare in Thailand) that firms supplement their purchases of publicly produced electricity with electricity produced internally. To prepare an econometric estimate, they specify a translog model. In Nigeria, where firms exhibit excess capacity, generators are treated as a fixed input, whereas in Indonesia, where firms are expanding, they are variable. They confirm strong scale economies in internal power production in both Nigeria and Indonesia. Shadow price analysis for both countries shows that smaller firms would pay much more for public power than larger firms would. Instead of giving quantity discounts, public monopolies should charge the larger firms more and the smaller firms less than they presently charge. In Nigeria, the large firms would make intensive use of their idle generating capacity, while in Indonesia their would expand their facilities. In both countries, small users would realize savings by having to rely less on expensive endogenous power.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1996/05/01/000009265_3961214125948/Rendered/PDF/multi_page.pdf
Download Restriction: no

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1605.

as
in new window

Length:
Date of creation: 31 May 1996
Date of revision:
Handle: RePEc:wbk:wbrwps:1605
Contact details of provider: Postal: 1818 H Street, N.W., Washington, DC 20433
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Pindyck, Robert S, 1979. "Interfuel Substitution and the Industrial Demand for Energy: An International Comparison," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 169-79, May.
  2. Morrison, C. J. & Berndt, E. R., 1981. "Short-run labor productivity in a dynamic model," Journal of Econometrics, Elsevier, vol. 16(3), pages 339-365, August.
  3. Berndt, Ernst R & Wood, David O, 1975. "Technology, Prices, and the Derived Demand for Energy," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 259-68, August.
  4. Murray, Michael P., 1983. "Mythical demands and mythical supplies for proper estimation of Rosen's hedonic price model," Journal of Urban Economics, Elsevier, vol. 14(3), pages 327-337, November.
  5. Baumol, William J & Lee, Kyu Sik, 1991. "Contestable Markets, Trade, and Development," World Bank Research Observer, World Bank Group, vol. 6(1), pages 1-17, January.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1605. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.