Infrastructure Quality and the Subsidy Trap

• 成果类型: Article
• 署名作者: McRae, Shaun
• 署名单位: University of Michigan System; University of Michigan
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20110572
• 发表日期: 2015
• 页码: 35-66
• 关键词: electricity demand; Water demand; baby boom; electrification; TECHNOLOGY; provision; POWER

摘要

Electricity and water are often subsidized in developing countries to increase their affordability for low-income households. Ideally, such subsidies would create sufficient demand in poor neighborhoods to encourage private investment in their infrastructure. Instead, many regions receiving large subsidies have precarious distribution networks supplying users who never pay. Using a structural model of household electricity demand in Colombia, I predict the change in consumption and profits from upgrading low-quality electricity connections. I show that the existing subsidies, which provide greater transfers to areas with unreliable supply, deter investment to modernize infrastructure. Finally, I analyze alternative programs with stronger investment incentives.