Working Paper: NBER ID: w19977
Authors: Hunt Allcott; Allan Collard-Wexler; Stephen D O'Connell
Abstract: We estimate the effects of electricity shortages on Indian manufacturers, instrumenting with supply shifts from hydroelectric power availability. We estimate that India’s average reported level of shortages reduces the average plant’s revenues and producer surplus by five to ten percent, but average productivity losses are significantly smaller because most inputs can be stored during outages. Shortages distort the plant size distribution, as there are significant economies of scale in generator costs and shortages more severely affect plants without generators. Simulations show that offering interruptible retail electricity contracts could substantially reduce the impact of shortages.
Keywords: manufacturing; productivity; india; electricity shortages
JEL Codes: D04; D24; L11; L94; O12; O13; Q41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Electricity shortages (L94) | Average plant's revenues (Q29) |
| Electricity shortages (L94) | Producer surplus (D41) |
| Electricity shortages (L94) | Plant size distribution (D39) |
| Electricity shortages (L94) | Material inputs (L61) |
| Electricity shortages (L94) | Average revenues (D49) |
| Hydroelectric power availability (L94) | Electricity shortages (L94) |