Price Regulation of the Electricity Sector in Argentina


Alejandro Cacace. 2008. “Price Regulation of the Electricity Sector in Argentina.” Bologna, Hamburg, and Erasmus Rotterdam Universities. Thesis Type: Master Thesis.
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By employing microeconomic theory, the paper explores different alternatives to price regulation in public utilities concerning the goals established by a specific legal system or regulatory framework. This work aims to demonstrate the various policy trade-offs that must be faced when designing retail price schemes (at the distribution stage) in a natural monopoly industry. It also addresses the need to balance the various policy objectives (efficiency, equity -access and affordability-, a zero-budget constraint, and demand management or resource conservation) by analyzing the case of a large emerging market economy, Argentina, and its electricity sector. The paper especially considers the use of increasing block tariffs (IBTs) as a tool capable of balancing the policy goals mentioned. The conclusions apply to other public utility sectors, such as water or natural gas, and other emerging market economies with similar macroeconomic conditions (high growth, inequality, and inflation).