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The authors bring new empirical evidence on the impact of the choice of ownership and regulatory regime on firms' productivity and prices paid by consumers. They collect the evidence from a sample of electricity distribution companies in Latin America. The authors rely on estimations of labor and operation and maintenance (O&M) input requirement functions using alternative econometric approaches. Their main conclusions are: 1. Private firms perform better (approximately 30 percent) than public firms. 2. The regulatory regimes matter, so that price-cap regulated firms do better than rate-of-return regulated firms, and firms regulated under hybrid regimes have intermediate performance. 3. Private firms operating under rate of return are at most as efficient as public firms. 4. There is no clear pattern of differences in electricity prices according to the regulatory regime. 5. Final prices fell in general but the drop did not match the productivity gains, implying that the operators and the state share some of the gains in the form of rents and higher tax revenue, respectively.

Infrastructure (Economics)

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The authors bring new empirical evidence on the impact of the choice of ownership and regulatory regime on firms' productivity and prices paid by consumers. They collect the evidence from a sample of electricity distribution companies in Latin America. The authors rely on estimations of labor and operation and maintenance (O&M) input requirement functions using alternative econometric approaches. Their main conclusions are: 1. Private firms perform better (approximately 30 percent) than public firms. 2. The regulatory regimes matter, so that price-cap regulated firms do better than rate-of-return regulated firms, and firms regulated under hybrid regimes have intermediate performance. 3. Private firms operating under rate of return are at most as efficient as public firms. 4. There is no clear pattern of differences in electricity prices according to the regulatory regime. 5. Final prices fell in general but the drop did not match the productivity gains, implying that the operators and the state share some of the gains in the form of rents and higher tax revenue, respectively.

Infrastructure (Economics)

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"Estache, Laffont, and Zhang develop a model to analyze the effects of asymmetric information on optimal universal service policy in the public utilities of developing countries. Optimal universal service policy is implemented using two regulatory instruments pricing and network investment. Under discriminatory pricing, asymmetric information leads to a higher price and smaller network in the rural area than under full information. Under uniform pricing, the price is lower but the network is even smaller. In addition, under both pricing regimes, not only the firm but also taxpayers have incentives to collude with the regulator. This paper a product of the Office of the Vice President, Infrastructure Network is part of a larger effort in the network to promote analytical work on emerging policy issues in infrastructure service delivery"--World Bank web site.

Infrastructure (Economics)

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Economic infrastructure --- Lesotho

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Development of the western region is vital to the balanced growth of China. Luo studies the impacts of infrastructure investment that may most efficiently alleviate the burden of geographical remoteness of the West. Having constructed the "adjusted distance" to approximate the transport cost, which takes into account the effects of real distance and infrastructure development, the author defines the "peripheral degree" to measure the effective remoteness of a province to an economic center. Using panel data for 1979-99 from the Chinese provinces, she shows that geographic attractiveness plays a significant role in a Solow-type growth determination model. Given the invariability of pure geographic position, progress in transportation facilities is essential to reduce the geographic handicap and to encourage the catching-up of the western region. The author's simulation results show that the central transportation hubs (Hubei, Henan, and Hunan) merit most infrastructure investments, for they favor the development of many provinces, if regional balanced growth is considered as the prime objective. In particular, improvement in the transportation facilities in central hubs will have greater effects on western development than that in the western region by itself. Improvements in the transportation facilities of the central hubs substantially improves the geographic attractiveness of the western region by reducing the transport cost from the West to the Coast and by promoting the emergence of new economic centers in such hubs, which tends to modify the national economic geographic structure. This paper is a product of the Office of the Vice President and Chief Economist, Development Economics.

Infrastructure (Economics) --- Capitalism.