Regulation and Welfare: Assessing the Regulation of Electricity and Water Supply Utilities in Colombia During the 1990s. The Case of Empresas Públicas de Medellín

Luis Vélez, Andrés Ramírez Hassan (), Liz Londoño, Yudy Giraldo and Daniel Londoño

Lecturas de Economía, 2011, issue 74, 231-270

Abstract: Public utilities reforms in the nineties introduced institutional and methodological changes in the price regulation of electricity and water supply utilities in Colombia. This paper, in addition to outlining these changes, evaluates welfare effects through a counterfactual scenario and the measurement of equivalent variation. With the counterfactual, we analyze how prices would have evolved had reforms not been made, while the equivalent variation assesses the impact of reforms on consumers’ welfare. To calculate the equivalent variation, an Almost Ideal Demand System is first estimated to obtain price and expenditure elasticities. In general, we conclude that regulation led to a consumer welfare loss.

Keywords: regulation; public utilities; counterfactual analysis; elasticities; equivalent variation (search for similar items in EconPapers)
JEL-codes: C1 D12 L51 L97 (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:lde:journl:y:2011:i:74:p:231-270

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