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WILL THE MARKET KEEP BRAZIL LIT UP? OWNERSHIP AND MARKET STRUCTURAL CHANGES IN THE ELECTRIC POWER SECTOR
Author(s) -
HAMAGUCHI NOBUAKI
Publication year - 2002
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.2002.tb00925.x
Subject(s) - natural monopoly , monopoly , government (linguistics) , market economy , business , private sector , industrial organization , supply and demand , energy sector , electric power , power (physics) , economics , energy supply , public sector , energy (signal processing) , microeconomics , economic system , economy , economic growth , linguistics , philosophy , physics , statistics , mathematics , quantum mechanics
After achieving significant success until the 1970s, the Brazilian electric power sector stalled due to financial problems. The government promoted a shift toward a private ownership model and tried to entrust the market with creating a stable and efficient energy supply. However, the energy crisis highlighted the difficulties in this transition. This paper points out that the uncertainty inherent in the market‐based model increased information rent for the private companies and complicated the post‐privatization expansion scenario. Privatization driven by macroeconomic problems should be carefully reexamined, especially for public utilities with strong natural monopoly characteristics, since markets tend to fail to supply the socially optimal supply, thus directly affecting people's lives.