A cross-country analysis of electricity market reforms: Potential contribution of New Institutional Economics

Abstract

The paper explores whether the question of why some countries are able to implement more extensive reforms is closely related to the question of why some countries have better institutions than others.We analyse this question by using an empirical econometric model based on Poisson regression with cross-section data covering 51 states in US, 13 provinces in Canada and 51 other countries. In the course of the study, we check the validity of three important arguments of New Institutional Economics (NIE) for the power market liberalization process. The first argument is the "pathdependency". To test its impact on the reform progress, we try to explain whether the background of the chairperson of the regulatory agency when reforms started or that of the governor/minister responsible for energy policy at that time has an impact on the subsequent reform progress. The second argument is the impact of "democracy" as an institution on the reform progress. We look at the effect of two important indicators of democracy (i.e., civil liberties and political rights) on the reform progress. The final argument of NIE is about transaction costs. We concentrate on the level of

Reforming the power : an institutional analysis of power sector reforms in Pakistan

“…The lack of relevant data prevented us from employing econometric techniques, as utilized in some cross country studies (Erdogdu, 2012, Erdogdu, 2013a. We therefore opted for Q-methodology, since this allowed us to…”

“…Post-reform evaluations reveal that many reforming countries (mostly developing) have not made major improvements to the performance of their power sectors (Nagayama, 2007, Jamasb, 2006, Jamasb et al, 2004, Kessides, 2013. Discrepancies in reforms' performance amongst developing countries is triggered by differences in country specific institutional endowments such as political and economic institutions, state level organizations and ideology of the key reform entrepreneurs (including rule makers, implementers and employees of the organizations) (Erdogdu, 2013a, Zhang et al, 2008. Given the importance of country and sector specific institutional endowments in the success of institutional reforms in a particular country, it is necessary to analyze the institutional reforms in the power sector of a single country rather than at the aggregate level of a group of countries or at the continental level.…”

“…Inclusion of countries in such quantitative research is decided by availability of reform data, which is why developed countries have mostly been included in the quantitative studies. Recently, however, researchers have also started including developing countries in the evaluation studies of power sector reforms (Besant-Jones, 2006, Zhang et al, 2008, Erdogdu, 2013a. Single…”

“…Transaction costs represented by corruption level in the country significantly impact the progress of reforms. The form of government such as democracy or dictatorship also impact progress of reforms (Erdogdu, 2013a).…”

Asymmetric volatility in European day-ahead power markets: A comparative microeconomic analysis

“…Since the 1980s, however, the structure of electricity industry has shifted from a vertically integrated (and usually state-owned) monopoly towards unbundled (and usually privately owned) regulated utilities (Erdogdu, 2013(Erdogdu, , 2014. The popularity and importance of power price modeling grew in the late 1990s due to an increase in market risk and price volatility after deregulation.…”