Competition Vs Centrally Planned Electricity

Competition versus a Centrally Planned Electricity Industry

Concerns have been expressed in the media about the "failure" of the competitive electricity market and that centralised government management of electricity sector would have avoided the current power shortages New Zealand faces.

In a paper published by the New Zealand Institute for the Study of Competition and Regulation at Victoria University, Professor Lewis Evans and Professor Neil Quigley, both professors in the School of Economics and Finance, have questioned this view.

They argue that the prospect of shortages of electricity this winter does not indicate any failure of the competitive market structure and there is nothing in the history of central planning in New Zealand or in other countries that suggests we could be confident that it would have avoided the current problems facing the electricity industry or that it can do so in the future.

"Central planners are no more able to foresee the future than are managers of competing firms" they say.

Their paper can be viewed online at:

http://www.iscr.org.nz/worksinprogress/work_37.pdf

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