The impact of power market reforms on electricity price-cost margins and cross-subsidy levels: a cross country panel data analysis

Erkan Erdoğdu ()

MPRA Paper from University Library of Munich, Germany

Abstract: One of the main expectations from power market reform has been a reduction in price-cost margins and cross-subsidy levels between industrial and residential consumers. This paper focuses on this issue by looking at the impact of the electricity industry reforms on residential and industrial electricity price-cost margins and their effect on cross-subsidy levels between consumer groups. Using panel data for 63 developed and developing countries covering the period 1982–2009, empirical models are developed and analyzed. The research findings suggest that there isn’t a uniform pattern for the impact of reform process as a whole on price-cost margins and cross-subsidy levels. Each individual reform step has different impact on price-cost margins and cross subsidy levels for each consumer and country group. Our findings imply that reform steps have different impacts in different countries, which supports the idea that reform prescription for a specific country cannot easily be transferred to another one. So, transferring the formal and economic structure of a successful power market in a developed country to developing countries is not a sufficient condition for good economic performance of the electricity industries in developing countries. Furthermore, the study suggests that power consumption, income level and country specific features constitute other important determinants of electricity price-cost margins and cross-subsidy levels.

Keywords: Models with Panel Data; Power Market Reform; Electricity Prices (search for similar items in EconPapers)
JEL-codes: C51 L11 L94 Y40 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-com, nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Related works:
Journal Article: The impact of power market reforms on electricity price-cost margins and cross-subsidy levels: A cross country panel data analysis (2011)
Working Paper: Electricity Market Reform: Lessons for developing countries (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:28414

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