Power outages and firm performance: a hydro-IV approach for a single electricity grid

Robert Elliott (), Viet Nguyen-Tien and Eric A. Strobl

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We estimate the impact of power outages on firm performance using a hydro-instrumental variable strategy which integrates a river flow with a hydropower generation model and an electricity-grid-based distance interpolation technique. Comparing World Bank Enterprise Surveys in 2005 and 2015 for Vietnam, we find that despite considerable economic progress, firms have become more susceptible to power outages. Our estimates suggest that reducing the length of power cuts by 1% would have increased revenues by 4.66 billion USD. Other results show that firms with less reliable electricity have lower productivity and use less flexible inputs, which is not mitigated by backup generators.

Keywords: firm performance; growth; instrumental variables; power outages; Vietnam (search for similar items in EconPapers)
JEL-codes: N55 O13 Q54 R11 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2021-11-01
New Economics Papers: this item is included in nep-eff, nep-ene, nep-sea and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Energy Economics, 1, November, 2021, 103. ISSN: 0140-9883

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http://eprints.lse.ac.uk/112538/ Open access version. (application/pdf)

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Journal Article: Power outages and firm performance: A hydro-IV approach for a single electricity grid (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:112538

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