Auriol, EmmanuelleBiancini, Sara2013-09-262013-09-262013-06https://hdl.handle.net/10986/15852Power 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.en-USCC BY 3.0 IGOADVANCED ECONOMIESADVERSE EFFECTADVERSE IMPACTALTERNATIVE INVESTMENTARBITRATIONASYMMETRIC INFORMATIONBANK POLICYBENCHMARKBUDGET CONSTRAINTCAPACITY BUILDINGCLAIMANTCLOSED ECONOMYCOMMODITIESCOMMON MARKETCOMPETITION FOR MARKETCOMPETITIVE FRINGECONFLICT OF INTERESTCONSUMER SURPLUSCONSUMERSCOORDINATION FAILURECOST FUNCTIONSCOST REDUCTIONDEBTDEMAND FUNCTIONDEMAND FUNCTIONSDEREGULATIONDERIVATIVEDEVELOPING COUNTRIESDEVELOPMENT AGENCYDEVELOPMENT ASSISTANCEDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDISPUTE RESOLUTIONDIVIDENDSDOMESTIC MARKETDUMPINGDUOPOLYECONOMIC INTEGRATIONECONOMIC SYSTEMSECONOMIC THEORYECONOMIES OF SCALEELASTICITYELASTICITY OF DEMANDENERGY RESOURCESEQUILIBRIUMEQUILIBRIUM PRICEEXISTING INFRASTRUCTUREEXPORTERSEXPROPRIATIONEXTERNALITIESFINANCIAL CRISISFINANCIAL SUPPORTFIXED INVESTMENTFOREIGN FIRMFOREIGN FIRMSFOREIGN MARKETFREE TRADEFREE TRADE AGREEMENTGLOBAL INVESTMENTGLOBALIZATIONGOVERNMENT BUDGETHOLDINGSIMPERFECT COMPETITIONIMPORT QUOTASINCOMEINCOME LEVELSINDEBTED COUNTRIESINEFFICIENCYINFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE INVESTMENTINFRASTRUCTURE PROJECTSINFRASTRUCTURESINSTRUMENTINTERNATIONAL BANKINTERNATIONAL ECONOMICSINTERNATIONAL TRADEINVESTINGINVESTMENT CHOICEINVESTMENT CHOICESINVESTMENT REQUIREMENTJURISDICTIONJUSTICE SYSTEMSLESS DEVELOPED COUNTRIESLOW-INCOME COUNTRIESMARGINAL COSTMARGINAL COST PRICINGMARGINAL COSTSMARKET ECONOMIESMARKET INTEGRATIONMARKET POWERMARKET SHAREMARKET SHARESMARKET SIZEMARKET SIZESMARKET STRUCTUREMONOPOLYNATURAL RESOURCESOLIGOPOLISTIC MARKETSOLIGOPOLYOPEN ECONOMYOPEN MARKETOPPORTUNITY COSTOPTIMAL INVESTMENTPARTICIPATION CONSTRAINTPOLITICAL ECONOMYPOSITIVE EXTERNALITIESPOTENTIAL INVESTORSPRIVATIZATIONPRODUCTION COSTSPROPERTY RIGHTSPUBLIC DEBTPUBLIC FUNDPUBLIC FUNDSPUBLIC GOODPUBLIC OWNERSHIPPUBLIC UTILITIESRAMSEY PRICEREDISTRIBUTIVE EFFECTSREGIONAL INTEGRATIONREGIONAL POWERREGULATORREGULATORSREGULATORY AUTHORITYREGULATORY BODIESREGULATORY BODYRESERVERULE OF LAWSALESSHADOW PRICESHAREHOLDERSSMALL COUNTRYSOCIAL COSTSUSTAINABLE INVESTMENTTARIFF REVENUESTAXTAX RATETAX RATESTAX STRUCTURETAXATIONTRADE LIBERALIZATIONTRADINGTRADING MARKETTRANSACTIONTRANSACTION COSTSTRANSITION ECONOMIESTRANSPORTTRANSPORT CHARGESTRANSPORTATIONTRANSPORTATION COSTTRANSPORTATION COSTSTRANSPORTATION FACILITIESTRANSPORTATION INFRASTRUCTURETRUEUNIFORM PRICEVALUATIONVARIABLE COSTWORLD DEVELOPMENT INDICATORSelectricityinvestmentregulationWorld Bank10.1596/1813-9450-6494