Electricity Reliability and Economic Development in Cities: A Microeconomic Perspective
We review existing evidence on the causes and consequences of electricity outages on economic development, focusing on the urban setting. Studies on the microeconomics of electrification concentrate primarily on the impacts of expanding access to electricity in rural areas. In cities, the main issue is the reliability of the electric grid rather than the lack of access to electricity. We discuss supply side, demand side, and political economy factors causing outages, the economic impacts of outages, and how energy suppliers respond to the prospect of electricity shortages. We conclude by highlighting four areas for further research.