Technical Change and Catching-up: The Electricity Distribution Sector in South America

The main purpose of this paper is to analyze technical change in the electricity distribution sector in South America, in the period 1994-1997. We do so by estimating a Maximum Likelihood stochastic frontier. We found that there is no evidence of catching up effects in the sector during this period. Besides, there is partial evidence that suggests that countries which reformed their electricity sector had a better performance than those which did not. We also found an increase in the capital share in the countries that made the reform and an increment in the labor share in the ones that did not make the reform.Technical change; Catching-Up; Stochastic frontier

La Determinación del Costo de Capital en América Latina Un Estudio Comparativo de Casos

El objetivo de este trabajo es presentar un análisis comparativo de la determinación del costo de capital en sectores regulados en distintos países de América Latina. Los años noventa mostró una importante transformación en los sectores de servicios públicos que se inició en los países centrales pero que tuvo su mayor difusión e impacto en América Latina. Así, por ejemplo un 48% de la inversión directa en infraestructura y un 35% del total de proyectos de participación privada durante ese período tuvieron como destino países de América Latinacosto de capital; sectores regulados; servicios públicos; inversión directa en infraestructura;

The Cost of Capital in Regulated Firms: The Argentine Experience

The sustainability of service is one of the fundamental aims of any regulatory system, and this tends to be reflected in the general principles within the legal framework of each public service. The necessity to cover economic costs of service then follows, in order to cover costs in such a way as to guarantee the maintaining and continuity of the system as well as its expansion. These economic costs should necessarily include sufficient retribution for the capital used by investors: the cost of capital. In the case of Argentine regulation, it is usual practice to use an adapted form of the CAPM (Capital Asset Pricing Model) to calculate the opportunity cost of equity, in such a way as to take the country risk into account. In this work we will analyse the components of the adapted formula for the cost of capital, discussing incentives which generate each of the possible outcomes for the regulated firms. Finally, we will present a model of dynamic optimisation for a regulated firm in a country such as Argentina.regulatory system; public service; CAPM; country risk