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Determinants of successful electricity market reform

Erdogdu, Erkan (2011): Determinants of successful electricity market reform.


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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 empirical econometric models with cross-section data covering 51 countries. The results show that both the background of the regulator and the energy minister and the institutional endowments of a country are important determinants of how far reforms have gone in a country. Our results suggest that the best first chairman of a regulatory agency, in terms of reform progress, seems to be one with a degree in law or engineering and one with a long period in office. The best minister responsible for energy policy when regulator is set up is, on the other hand, one with a degree in business or economics and one who has as little experience in the electricity industry as possible and does not have a degree in law. The results also put forward that any improvement in the structure of the legal system, security of property rights, democracy or investment environment positively contributes to the reform progress in a country. However, there seems to be a negative relationship between reform progress and both civil liberties and political rights.

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