Cost Assessment of (Un)bundling: Separation of Vertically Integrated Public Utilities

Pablo Arocena () and Subal Kumbhakar
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Pablo Arocena: Institute for Advanced Research in Business and Economics (INARBE)

Chapter 45 in Handbook of Production Economics, 2022, pp 1751-1786 from Springer

Abstract: Abstract In this chapter, we focus on the unbundling or separation of vertically integrated public utilities, which has been the cornerstone of competitive reforms in the utilities sector worldwide over the last 30 years. In particular, we provide a critical review of the empirical literature on economies of vertical integration in the electrical power industry. Estimates of scope economies across vertical stages have yielded somewhat mixed results in the electricity industry. Although the evidence remains ambiguous, some studies often report enormous differences in the estimates of the magnitude and significance of such economies, which is not helpful to policy makers. We identify several methodological issues in the empirical methods that have been employed, thereby identifying the challenges that future empirical research will need to address to provide improved estimates of economies of vertical integration.

Keywords: Vertical integration; Electric utilities; Unbundling; Economies of scope; Cost estimation (search for similar items in EconPapers)
JEL-codes: L25 L51 L94 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-10-3455-8_47

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DOI: 10.1007/978-981-10-3455-8_47

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