Hold-Up Problems in International Electricity Trade
37 Pages Posted: 2 Sep 2015
Date Written: September 1, 2013
This paper investigates the impact of limited commitment on international electricity trade. We build a model where hold-up problems originating from incomplete contracts decrease countries’ willingness to trade. In particular, an inability to commit to future trade reduces the specialization of investment. The paper then uses the model to explore potential policy solutions including deregulation and the liberalization of ownership.
JEL Classification: D86, F19, L94, O18
Suggested Citation: Suggested Citation