Powering up developing countries through integration ?

Emmanuelle Auriol and Sara Biancini

No 6494, Policy Research Working Paper Series from The World Bank

Abstract: Power market integration is analyzed in a two-country model with nationally regulated firms and costly public funds. If the generation costs between the two countries are too similar, negative business stealing outweighs efficiency gains so that the subsequent integration welfare decreases in both regions. Integration is welfare enhancing when the cost difference between two regions is large enough. The benefits from export profits increase the total welfare in the exporting country, whereas the importing country benefits from lower prices. In this case, market integration also improves incentives to invest compared to autarky. The investment levels remain inefficient, however, especially for transportation facilities. Free riding reduces incentives to invest in these public-good components of the network, whereas business stealing tends to decrease the capacity to finance new investment.

Keywords: Transport Economics Policy&Planning; Economic Theory&Research; Debt Markets; Markets and Market Access; Emerging Markets (search for similar items in EconPapers)
Date: 2013-06-01
New Economics Papers: this item is included in nep-dev and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/WPS6494.pdf (application/pdf)

Related works:
Journal Article: Powering Up Developing Countries through Integration? (2015)
Working Paper: Powering Up Developing Countries through Integration? (2013)
Working Paper: Powering Up Developing Countries through Integration? (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:6494

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().