Second Generation Electricity Reforms in Latin America and the California Paradigm

Juan-Pablo Montero and Hugh Rudnick

No 216, Documentos de Trabajo from Instituto de Economia. Pontificia Universidad Católica de Chile.

Abstract: In this paper we discuss second-generation electricity reforms being formulated in Latin America and how they are being reshaped by the California crisis, which had stood as a paradigm, at least in theory, for fully competitive markets. We argue that the main lesson policy makers in Latin America should draw from the experience in California and other electricity markets around the world is that the liberalization of wholesale markets will not result in more competitive outcomes where market concentration is significant, final consumers are isolated from actual marginal production costs and capacity is tight. At least in the case of Argentina and Chile, the California crisis has had a "positive externality" by persuading policy makers, at least momentarily, to postpone liberalization reforms and make them realize the complexities in implementing competitive markets.

Date: 2002
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Citations: View citations in EconPapers (11)

Published as "Second Generation Electricity Reforms in Latin America and the California Paradigm", Journal of Industry, Competition and Trade 2, pp. 159-172, 2002.

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Journal Article: Second Generation Electricity Reforms in Latin America and the California Paradigm (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:ioe:doctra:216

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