Browsing by Author "Tesemma, Tewodros"

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Cost of Power Outages for Manufacturing Firms in Ethiopia: A Stated Preference Study
(2018-05) Carlsson, Fredrik; Demeke, Eyoual; Martinsson, Peter; Tesemma, Tewodros; Dept. of Economics, University of Gothenburg
Having a reliable supply of electricity is essential for the operation of any firm. In most developing countries, however, electricity supply is highly unreliable. In this study, we estimate the cost of power outages for micro, small, and medium-sized enterprises in Addis Ababa, Ethiopia, using a stated preference survey. We find that the willingness to pay, and thus the cost of power outages, is substantial. The estimated willingness to pay for a reduction of one power outage corresponds to a tariff increase of 16 percent. The willingness to pay for reducing the average length of a power outage by one hour corresponds to a 33 percent increase. The compensating variation for a zero-outage situation corresponds to about three times the current electricity cost. There is, however, considerable heterogeneity in costs across sectors, firm sizes, and levels of electricity consumption. Policy makers could consider this observed heterogeneity when it comes to aspects such as where to invest to improve reliability and different types of electricity contracts.
Encouraging adoption of fuel-efficient vehicles – A policy reform evaluation from Ethiopia
(University of Gothenburg, 2023-11) Tesemma, Tewodros; ; Department of Economics, University of Gothenburg
The extent of vehicle ownership is increasing in many developing countries. Most of the increase takes place through import of second-hand vehicles that are usually fuel-inefficient and have poor emissions standards. This is creating enormous environmental pressures, since most developing countries also lack the necessary policies to regulate the sector. This study investigates the effect of a recent policy reform in Ethiopia that aimed at encouraging adoption of cleaner vehicles. In March 2020, Ethiopia introduced a new vehicle excise tax that linked the excise tax rate to engine size and age of vehicles, imposing lower rates on ‘fuel-efficient’ vehicles and higher rates on ‘fuel-inefficient’ ones. Exploiting the quasiexperimental nature of the reform and employing a difference-in-differences design, the study investigates the reform’s effect on vehicle ownership and composition of the vehicles, and in reducing CO2 emissions. The results show that while the reform has no significant effect on total vehicle ownership, it has a significant effect in increasing the adoption of newer vehicles. We also find no significant increase in the adoption of smaller-engine vehicles. The reformled to no significant reduction on CO2 emissions intensity of the vehicles. The reform, however, significantly increased adoption of small-engine but new vehicles - relatively the most ‘fuel-efficient’ alternatives. The results are robust to various robustness checks. The study discusses the policy implications of the results, especially for developing countries.
Measuring Trust in Institutions
(2018-05) Carlsson, Fredrik; Demeke, Eyoual; Martinsson, Peter; Tesemma, Tewodros; Dept. of Economics, University of Gothenburg
In empirical studies, survey questions are typically used to measure trust; trust games are also used to measure interpersonal trust. In this paper, we measure trust in different institutions by using both trust games and survey questions. We find that generalized trust is only weakly correlated with trust in specific institutions, when elicited both by using a trust game and by using survey questions. However, the correlation between trust in a specific institution elicited through a trust game and stated trust for the same institution is stronger and statistically significant. Thus, our findings suggest that generalized trust is not an appropriate measure of institutional trust and that more specific institutional trust measures should be used.