The twelfth Doctoral graduate’s academic Salon of Theoretical economics was held by China Center for Special Economic Zones Research on 29th Oct 2014 in liberal arts building. We have the honor to invite overseas talents – Dr. Li fan give a speech in this salon.
Dr. Li fan presented her achievements during the period of study for doctorate--《Do Subsidized Households Receive Low Quality Utility Services? ：Electricity Sector Cross-Subsidies in Colombia》. Developing countries often use cross-subsidies to promote electricity consumption by poor households. That raises the issue of whether charging lower prices to poor households, while boosting their consumption, also induces utilities to lower the quality of service they receive. I specify a theoretical model in which the government sets subsidies and surcharges for consumers from different income classes and partially covers the deficit that the utility may face. The model shows that cross-subsidies do raise the consumption of subsidized consumers but may reduce their quality of service. When government transfers fail to cover the deficit, the utility reduces quality for subsidized consumers but increases quality for surcharged consumers. The model also shows that if the government imposes a cap on the amount of transfers, output to subsidized consumers increases but output to surcharge consumers decreases when the cap increases. The predictions on quality variation are empirically tested using the Colombian electricity sector. Evidence from the Living Standard Measurement Survey indicates that the utility provides lower perceived service quality to subsidized consumers than to residents paying surcharges. The difference in perceived quality is reduced, however, by an increase in the amount of government transfers.
The presence of students has a discussion about from the aspects of model building and the correlation of variables with Dr. Li fan. All professors and students think her report is not only lively and interesting but also very strict.