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The energy market liberalisation process in Europe is increasingly focused on electricity market integration and related cross border issues. This signals that the liberalisation of national electricity markets is now closer to the long-term objective of a single European energy market. The interface between the national electricity markets requires physical interconnections and technical arrangements. However, further progress towards this objective also raises important issues regarding the framework within which the integrated market is implemented. This paper reviews the progress towards a single European electricity market. We then discuss the emerging issues of market concentration, investments, and security of supply as well as some aspects of market design and regulation that are crucial for dynamic performance of a single European market.

Better understanding of the role of learning by doing and learning by research at different stages of technical progress is important for development of a theory of innovation and designing effective technology policies. This paper presents a comparative analysis of energy technology learning and progress within the framework of Schumpeter's invention-innovation-diffusion paradigm. We estimate learning by doing and research rates for a range of energy technologies in four stages of technical progress. We find learning patterns that are broadly in line with the perceived view of the process of technical progress. Emerging technologies respond slowly to research and development (R&D) and capacity expansion. Evolving technologies exhibit high learning by doing and research rates. Reviving technologies exhibit considerable response to learning by research although they do not face significant market constraints. Mature technologies exhibit similar learning characteristics to emerging technologies. The results point to relative importance of R&D in the process of technological progress. We generally find higher learning by doing than learning by research rates but do not find any development stage where learning by doing alone is the dominant driver of technical change. Also, high capital intensity and market constraints appear to slow down the pace of progress of emerging and evolving technologies. We find little scope for potential substitution between learning by doing and learning by research across the technologies and different stages of their development path. It remains crucial to understand how a technology can be supported in its transition from the emergence stage to a self-sustaining growth path.

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WPS3549 AbstractDriven by ideology, economic reasoning, and early success stories, vast amounts of financial resources and effort have been spent on reforming infrastructure industries in developing countries. It is, therefore, important to examine whether evidence supports the logic of reforms. This paper reviews the empirical evidence on electricity reform in developing countries. We find that country institutions and sector governance play an important role in success and failure of reform. Also, reforms also appear to have increased operating efficiency and expanded access to urban customers. However, they have to a lesser degree passed on efficiency gains to customers, tackled distributional effects, and improved rural access. Moreover, some of the literature is not methodologically robust and on par with general development economics literature. Further, findings on some issues are limited and inconclusive while other important areas are yet to be addressed. Until we know more, implementation of reforms will be more based on ideology and economic theory rather than solid economic evidence.Keywords: Electricity, reform, developing countries JEL Classification: L52, L94, Q48 E El le ec ct tr ri ic ci it ty y S Se ec ct to or r R Re ef fo or rm m i in n D De ev ve el lo op pi in ng g C Co ou un nt tr ri ie es s, , J Ja am ma as sb b, , M Mo ot ta a, , N Ne ew wb be er ry y, , P Po ol ll li it tt t 1 1 IntroductionSince the early 1990s, a large number of developed, transition and developing countries around the world have embarked on electricity sector reform. The pace and the extent of the trend has been remarkable and, by the end of 1990s, the majority of OECD countries and over 70 developing and transition countries had taken some steps toward reforming their electricity sector (Bacon, 1999;Steiner, 2001). This has occurred under a broad paradigm shift from state ownership and centralized organization of infrastructure industries to private ownership, public regulation and market-oriented structures (OECD, 2000). The technological progress and reform pioneered in some countries has encouraged others to follow suit.This trend primarily reflects dissatisfaction with the performance of traditional forms of organisation and a desire to improve efficiency and reduce fiscal drain in the public sector. Added to this is a growing questioning of the theoretical and empirical justification for state-owned enterprise, the development of models of competition within network utilities and theories of incentive regulation of private natural monopolies (see Newbery, 1999).The model adopted for the electricity supply industry (ESI) since the Second World War resulted in the use of costly generation technologies, neglect of customer services and economic inefficiency. Combined with the interruption of demand growth after the oil crisis of the 1970s, the traditional approach to the industry resulted in excess capacity. In addition, the perverse incentives of cost-of-service regulation had received serious criticism (Averch a...

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