Integrating the power sector in India: Reflections and suggestions
Abstract The historical development of the power generation industry in India shows a steady trend towards complete integration: ‘… The aim is to connect all the power-regions by the end of the Seventh Plan. The desirability of having a single organization to own and to operate the essential elements of the national grid needs to be urgently considered …’ ([4], p 335). This paper seeks to verify the actual desirability of integration, through economic as well as technical aspects; and to emphasize the deviations induced by a strengthened concentration and suggest corrective directions to a second-best equilibrium.
Dual v uniform prices — an application
Abstract The economic literature on non-linear pricing schemes mainly considers the case where average price decreases with quantity — indeed this pricing strategy is often referred to, especially by firms displaying non-convex production sets. However, such a price schedule seems inadequate to cope with the ‘endowments’ of most developing countries, viz severe income inequalities and binding capacity constraints. Thus, we design here an increasing-blocks tariff and show, as an illustration, how it can improve the distribution pattern of low-voltage electricity in India without depressing the producer's profit. Shadow income transfers automatically flow within the sector, without requiring the heavy informational and operational background necessary for lump-sum transfers, as advocated by second-best theory.
A Welfare Approach to Energy Pricing: A Case Study for India
Because oil crises or other supply constraints distort energy production and demand management, energy pricing remains an important policy instrument of economic management. Moreover, for many developing countries, the problem of energy management includes the pricing of energy products within a framework of planning, as well as questions of supply. In many countries energy production and distribution are now publicly managed. Such public operations have to account for both efficiency in production and equity in distribution. The pricing of energy inputs thus emerges as a key planning parameter.