Research

Published Papers:

Journal of Industrial Economics Volume 71, Issue 2, June 2023, Pages 354-406.  

Using information on price bids in wholesale electricity pools and empirical techniques described in the literature on electricity markets, this study identifies the market power mitigation effect of public firms in the Colombian market. The results suggest that while private firms exercise less market power than is predicted by a profit-maximization model, there are marked differences between private and public firms in their exercise of unilateral market power. These findings support the hypothesis of the market power mitigation effect of public firms. 

Energy Economics - Volume 111, July 2022, 106058.

This paper studies two key aspects of the introduction of private management in the Colombian electricity generation industry: (1) It quantifies the impact of changes to private management on bidding prices; (2) Verifies empirically the basic predictions from the theory of mixed oligopoly markets. Specifically, it investigates how the market concentration and the level of forward contracting affect the potential changes in the exercise of market power subsequent to the switch to private management. It applies a differences-in-differences model with staggered adoption on bidding daily data of the firms in the Colombian wholesale electricity market between 2002 and 2018. The results suggest that: (1) switches to private management provoke a non-permanent increase in bidding prices, consistent with an initial dominance of a market power effect which is gradually offset by cost improvements; (2) Higher levels of market concentration are associated with a greater increase in bidding prices resulting from the change to private management; (3) Lower levels of forward contracting are linked with higher bidding prices for both, public and private firms.

Work-in Progress:

with Rocco Macchiavello (LSE), Mario Bernasconi (Tilburg U) & Miguel Espinosa (U Bocconi)

Under collusion, firms deviate from current profit maximization in anticipation of future rewards. As current profit maximization places little restrictions on firms’ pricing behaviour, collusive conduct is hard to infer. We show that bids from certain firms in the Colombian wholesale electricity market collapsed immediately after the announcement, and before the implementation, of a reform that potentially made collusion harder to sustain. After ruling out confounders, we uncover how the cartel functioned and how firms may have communicated. Calibrating the dynamic enforcement constraint confirms that collusion was sustainable before, but not after, the reform. The conclusions discuss policy implications.

In energy policy discussions related to the imposition of carbon taxes, it has been argued that this type of measure can have negative impacts on the competitiveness of the industry and economic growth. In this paper, I exploit a tax reduction for industrial users carried out in Colombia in 2011 to study the impact of tax reductions on industrial productivity through a difference-in-difference model. The preliminary results of this study, contrary to expectations, indicate that the sectors of economic activity that had tax reduction showed a slower growth rate. This result is consistent with Porter's hypothesis that companies with low tax requirements relax their efforts in innovation.

E-mail me for obtaining the most recent slides.

with Joan-Ramón Borrell (UB) 

In this paper, we propose a mixed duopoly model in which the public company aims to maximize a weighted function of profits and its production scale. We found that if the weight to the scale of production is high the public firm may exclude its rivals from the market (exercising predatory prices). We also find that the profit sacrifice by the public firm to get this exclusion is higher if there are marked differences between the cost efficiency of private and public firms.

Published papers and book chapters in Spanish

‘Evaluación del mecanismo de incentivos a la calidad del servicio de distribución de energía eléctrica en Colombia: un enfoque desde el modelo agente-principal’ (Evaluation of the Incentive Mechanism for Quality of Electricity Distribution Service in Colombia: A Principal Agent Model Approach). Co-Authored with David Riaño. In ‘Revista Planeación y Desarrollo’. 2011. Volume XLIII, No. 2, 118-152.

‘Evolución Reciente de la Concentración en Generación Eléctrica en América Latina’ (Recent evolution in Market Concentration in Electricity Generation in Latin America). Co-authored with Mario Garcia Molina. In Colombian Observatory of Energy Bulletin No. 25. April-June 2007. Center for Development Research. Universidad Nacional de Colombia. ISSN 1657 - 48OX.

 Co-Author of Chapters 1, 2 and 4 of the book ‘Sistemas de Seguimiento a Mercados Eléctricos Internacionales, Aplicación a los Países de la Región Andina’ (Monitoring Systems for International Electricity Markets, Application to the Countries of the Andean Region). Mario Garcia Molina, Editor. Center for Development Research. Universidad Nacional de Colombia, Colciencias, ISA Group. ISBN 978-958-701-786-1, December 2006.