network regulation and regulatory institutional reform revisiting the case of australia it is well understood that the success of liberalizing the electricity supply industry depends crucially on the quality and design of the regulatory and institutional framework this paper analyses the regulatory arrangements that underpin the work of the australian energy regulator aer these arrangements are contrasted with the regulatory structure of electricity provision in norway a key difference between the reform processes in the two countries relates to the lack of privatization in norway and the co existence of private and publicly owned generators and distributors in australia this comparative analysis allows us to make several recommendations to improve regulatory arrangements in australia these include greater independence for the aer better coordination among regulatory institutions greater use of benchmarking analysis greater customer involvement and improving market transparency and privatization of government owned corporations however the success of privatization will hinge upon the effectiveness of the regulatory environment

institutional determinants of power sector reform in pakistan the electricity supply sector in pakistan has performed poorly in recent years reforms were introduced in the mid 1990s to improve the sector but progressed slowly with no significant impacts on pre reform performance this study uses new institutional economics as a theoretical basis to elucidate reasons for the failure of power sector reforms in pakistan to make improvements interviews with 23 experts using q methodology generated 215 statements that were used as a q concourse of these 51 statements were selected for the q sample and ranked by 34 respondents depending on their importance analysis revealed four important discourses on the determinants of power sector reform failure in pakistan these included weak governance structure country and sectoral endowments inefficient regulator and unspecified political institutions or unfriendly political contexts the study recommends establishment of institutions that support a market based power supply sector and improvements to the contractual arrangements between stakeholders to reduce opportunistic behaviour

the new institutional economics this outstanding book presents new original contributions from some of the world s leading economists including ronald coase douglass c north masahiko aoki oliver e williamson and harold demsetz it demonstrates the extent and depth of the new institutional economics research programme which is having a worldwide impact on the economics profession

why political reservations many countries are amending their political systems to set aside positions to groups such as women and racial or religious minorities that are perceived as being disadvantaged using evidence from india this article assesses the case for these reservations jel h4 o15 several countries have introduced procedures either explicit quotas or forms of gerrymandering to ensure political representation of disadvantaged groups such as women or ethnic minorities in 2001 quotas for women in parliaments were in force in more than 30 countries in india seats are reserved for historically disadvantaged groups scheduled castes or sc and scheduled tribes or st in federal or state legislative assemblies and for both historically disadvantaged groups and women at all levels of the panchayat system the system of decentralized decision making on the basis of evidence accumulated about the indian experience this paper reviews the case for reservation

why don t poor countries catch up a cross national test of an institutional explanation early neoclassical analyses predicted that poor countries would grow faster than wealthy countries because of technological advances and diminishing returns to capital in the latter the reverse has occurred poor countries are falling back rather than catching up we suggest here that deficient institutions underlie this divergence employing various indicators of institutional quality including the rule of law the pervasiveness of corruption and the risk of expropriation and contract repudiation we show that the ability of poor countries to catch up is determined in large part by the institutional environment in which economic activity in these countries takes place jel o00 o10

power sector reform in south asia why slow and limited so far although south asian developing countries had initiated some form of electric power sector reform in the 1990s often under external lending agency pressures not much progress has been made so far and there is hardly any noteworthy example of a successful reform in the region this paper provides a brief review of power sector reform efforts in five south asian countries and uses an institutional economics framework to identify the factors shaping the success of power sector reforms four factors namely instability of rule makers poor overall acceptance slow adaptation and poor transition management are identified and their effect on the reform process of south asia are analysed the paper finds that political instability has affected the power sector reform of the region making hard decisions difficult to take slow progress of reform has also affected the sector viability as signs of adverse effects on the power sector investment and performance are already visible

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 analyze this question by using an empirical econometric model based on poisson regression with cross section data covering 51 states in the 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 path dependency 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 corruption in a country as one of the key factors that determine transaction costs and try to explore its impact on the reforms the results show that the backgrounds of the chairperson and the minister governor the level of democracy and corruption in a country are significantly correlated with how far reforms have gone in that country the negative relationship between reform progress and civil liberties may indicate that reforms may be limited in democratic countries with strong civil society institutions such as trade unions or other organized structures in the society that may consider reforms as harmful to their self interest

corporate failure prediction in the european energy sector a multicriteria approach and the effect of country characteristics this study examines the development of corporate failure prediction models for european firms in the energy sector using a large dataset from 18 countries the construction of the models is based on a multiple criteria decision aid mcda approach taking into account both ordinal criteria and nominal country sector effects the analysis is based on different modeling specifications first traditional financial variables are examined which are then extended with additional country level data related to the economic and business environment as well as data about the energy efficiency policies of the countries and the characteristics of their energy markets and networks the results indicate that energy related attributes have high discriminating power and add valuable information compared to the other attributes

the effect of regulatory governance on efficiency of thermal power generation in india a stochastic frontier analysis abstract this paper investigates the impact of institutional quality typified as regulatory governance on the performance of thermal power plants in india the indian power sector was reformed in the early 1990s however reforms are effective only as much as the regulators are committed in ensuring that they are implemented we hypothesize that higher the quality of regulation in a federal indian state higher is the efficiency of electric generation utilities a translog stochastic frontier model is estimated using index of state level independent regulation as one of the determinants of inefficiency the dataset comprises a panel of 77 coal based thermal power plants during the reform period covering over 70 of installed electricity generation capacity the mean technical efficiency of 76 7 indicates there is wide scope for efficiency improvement in the sector results are robust to various model specifications and show that state level regulators have positively impacted plant performance technical efficiency is sensitive to both unbundling of state utilities and regulatory experience the policy implication is that further reforms which empower independent regulators will have far reaching impacts on power sector performance

reforming the power sector in transition do institutions matter this paper aims to investigate the often poorly explored link between power sector reforms and wider institutional reforms in the economy across different groups of transition countries we use panel data econometrics based on bias corrected dynamic fixed effect analysis lsdvc to assess the impact of reforms on macroeconomic and power sector outcomes the results indicate that power sector reform is highly inter dependent with wider reforms in other sectors of the economy the findings indicate that failure to harmonize inter sector reforms leads to power sector reform measures being ineffective we conclude that the success of power sector reforms in developing countries largely depend on the extent to which they synchronize inter sector reforms in the economy

the new economics of regulation ten years after the new economics of regulation is an application of the principal agent methodology to the contractual relationship between regulators and regulated firms after a critique of the traditional paradigms of regulation from the point of view of information economics a canonical model of regulation under asymmetric information is developed a survey of the main results obtained in the new economics of regulation is then provided in particular concerning the implementation of optimal contracts by a menu of linear contracts the dichotomy between pricing and cost reimbursement rules the auctioning of incentive contracts the dynamics of contracting under limited commitment and the hierarchical problems in regulation empirical implications are then discussed and avenues of further research are described in the conclusion

on the incentives to experiment in federations abstract conventional wisdom has it that policy innovation is better promoted in a federal rather than in a unitary system recent research however has provided theoretical evidence to the contrary a multi jurisdictional system is characterized due to the existence of a horizontal information externality by under provision of policy innovation this paper presents a simple model that introduces political competition for federal office and emphasizes that such competition plays an important role in shaping the incentives for experimentation for in this case political actors use the innovative policies to signal ability to the electorate this effect may offset the effect that arises from the incentive to free ride and so a federal system may generate more innovation than a unitary one

asymmetric volatility in european day ahead power markets a comparative microeconomic analysis this paper uses high frequency spot price data from fourteen wholesale electricity markets in europe to analyze asymmetric volatility in european day ahead power markets with exponential garch e garch and tarch models our data set ranges from 1992 to 2015 and consists of approximately 926 000 observations as such this paper constitutes the most extensive and comprehensive work conducted so far on european power markets to the best of our knowledge unlike most of the literature that treats price as a continuous variable and attempts to model its trajectory this paper adopts a unique approach and regards each hour in a day a separate market the results show in post 2008 period the most expensive electricity is consumed in turkey ireland and uk while the cheapest power is in russia nordic countries and czech republic russia poland and czech republic have the least volatile markets while france ireland and portugal have the most volatile ones volatility has decreased in many european countries in post 2008 period besides we find magnitude effect is usually larger than the leverage effect meaning that the absolute value of price change is relatively more important than the sign of the change whether it is an increase or a decrease to explain volatility in european day ahead power markets moreover the results imply there is not a uniform inverse leverage effect in electricity prices that is price increases are more destabilizing in some european markets e g poland slovenia ireland netherlands than comparable price decreases but vice versa also holds true in some other countries e g portugal and france leverage or inverse leverage effect in post 2008 period is relatively stronger in portugal france and ireland but its impact is quite limited in turkey and germany furthermore although the impact of seasonality on prices is obvious a specific pattern cannot be identified finally large changes in the volatility will affect future volatilities for a relatively longer period of time in nordic countries ireland and the uk while changes in current volatility will have less effect on future volatilities in czech republic russia and turkey

the educational and professional background of central bankers and its effect on inflation an empirical analysis we assume that central banks can control inflation so that inflation rates reflect the preferences of the central bank council the hypothesis to be tested is that these preferences depend on the central bankers educational and or professional background in a panel data analysis for the euro area and eleven countries since 1973 we explain inflation either by the weights with which the educational and professional characteristics of the 391 council members were represented in the various central bank councils or by the education or profession of the median council members control variables are added using professional background weights we find that former members of the central bank staff and in some specifications former insurance executives commercial bankers other businessmen and public servants prefer significantly lower inflation rates than former union leaders and politicians do in the median voter analysis former central bankers commercial bankers businessmen and public servants are also significantly more inflation averse than economic scholars as for the education of the council members our results are less robust however if the median member of the central bank council has studied business the inflation rate is significantly lower than if she has studied economics taking educational and professional background together central banks seem to attract or produce primarily economists who are monetary conservatives whereas keynesian economists are more prominent in academia jel classification e42 e58

the institutional framework and economic development the compound growth rates of per capita output and farrell type efficiency measures for 115 market economies over the period 1960 80 were compared with measures of political civil and economic liberty it was found that the institutional framework has significant and large effects on the efficiency and growth rate of economies politically open societies which subscribe to the rule of law to private property and to the market allocation of resources grow at three times the rate and are two and one half times as efficient as societies in which these freedoms are abridged

corruption competition and democracy abstract this paper presents a model of the interaction between corrupt government officials and industrial firms to show that corruption is antithetical to competition it is hypothesized that a government agent that controls access to a formal market has a self interest in demanding a bribe payment that serves to limit the number of firms this corrupt official will also be subject to a detection technology that is a function of the amount of the bribe payment and the number of firms that pay it under quite normal assumptions about the shape of the graph of the detection function multiple equilibria can arise where one equilibrium is characterized by high corruption and low competition and another is characterized by low corruption and high competition some suggestive empirical evidence is presented that supports the main hypothesis that competition and corruption are negatively related

freedom and growth do constitutions matter this paper uses an augmented solow model with cross section data to measure the effect on per capita income of a the entrenchment of various rights in a country s constitution and b the level of economic freedom in a country broadly construed the results suggest that entrenchment per se of any single right seldom has a significant general economic effect while the effect of economic freedom is significant and substantial the paper then considers whether such evidence could support the proposition that constitutions do not matter while it concludes otherwise it does caution against incurring excessive negotiation costs to obtain entrenchment of a comprehensive wish list of rights

institutional framework and economic development international evidence this paper examines the effect of quality of the institutional framework on economic development our empirical results support the hypothesis that good institutions improve efficiency and accelerate growth the positive effect of institutional quality is more pronounced with mutually reinforcing support of economic freedom our results also indicate that good institutions help developing countries grow faster to achieve conditional convergence we infer from the results that economic development requires not only physical and human capital formation but also freedom to choose and institutional support

evaluating assignment without transfers a market perspective all random assignments allocations without transfers can be considered as market outcomes with personalized prices and an equal income prices proportional across agents imply efficiency common prices lead to efficiency and envy freeness this market perspective also reveals a weakness of envy freeness

exploring the determinants of best practice benchmarking in electricity network regulation abstract in this paper we use a best practice index constructed from the survey responses of regulators in 40 countries to explore the determinants of the methods used in electricity network regulation drawing from the incentive regulation and institutional economics literature we construct an empirical model to investigate the impact of industry size political and economic institutions on the degree of best practice regulation our results suggest that the existence and experience of an independent regulator is the most important institutional determinant of best practice regulation in addition small numbers of network companies act as a constraint on the use of advanced benchmarking methods finally regional effects are also important these findings lead us to question whether one best practice model is in fact applicable to countries with very different political and economic contexts

distributive politics and economic growth a crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it in this paper we analyze the relationship between the two we focus on how an economy s initial configuration of resources shapes the political struggle for income and wealth distribution and how that in turn affects long run growth our main conclusion is that inequality is conducive to the adoption of growth retarding policies we derive this result from a simple political economy model of growth and present cross country evidence consistent with it the key feature of our model is that individuals differ in their relative factor endowments we distinguish between two types of factors an accumulated factor called capital and a nonaccumulated factor called labor growth is driven by the expansion of the capital stock which is in turn determined by individual saving decisions long run growth is endogenous as the aggregate production function is taken to be linearly homogeneous in capital and productive government services taken together the provision of government services is financed by a tax on capital because government services are productive a small tax on

a dynamic model of soft budget constraint abstract we study the soft budget constraint by dynamic models and conclude that the soft budget constraint originated in the investment activities do not match the profit function and policy burdens will intensify the soft budget constraint

liberty and development a further empirical perspective this paper uses the wright ratings of economic freedom to investigate the relationship between economic freedom and economic development for most countries in the world this rela tionship is apparently strong and direct for such economic freedoms as freedom of property and freedom of movement but inverse for freedom of association these findings appear to be indepen dent of the type of economic system or civil liberties as measured by the gastil ratings which have their own important effects on economic development