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The impact of transmission auctions on Brazilian electric power companies

Lucas G.L. Brandão and Philipp Ehrl

Utilities Policy, 2022, vol. 78, issue C

Abstract: This paper estimates the impact of electricity transmission line auctions on the stock prices of Brazilian companies. We combine the endogenous switching regression model with flexible copula functions to account for the dependency between a firm's choice to participate in an auction and the impact of the auction's result on the firm's stock price. Both processes are thus modeled as a function of firm-specific and macroeconomic variables while accounting explicitly for their dependence. We show that a lower number of participants, being a state-owned company, and having synergies positively affect the chance of winning an auction. According to the estimated average treatment effect, a new transmission line increases firms' stock prices by 3.7%.

Keywords: Electric power transmission; Stock prices; Copulas (search for similar items in EconPapers)
JEL-codes: C15 C46 E52 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.jup.2022.101412

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