Does competition reduce costs?: assessing the impact of regulatory restructuring on U.S. electric generation efficiency
"Although the allocative efficiency benefits of competition are a tenet of microeconomic theory, the relation between competition and technical efficiency is less clear. Neoclassical models of profit-maximization subsume static cost-minimizing behavior regardless of market competitiveness, but...
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| Main Authors: | , , |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
Cambridge, Mass.
National Bureau of Economic Research
2004
|
| Series: | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series
11001 |
| Subjects: | |
| Online Access: | Volltext |
| Summary: | "Although the allocative efficiency benefits of competition are a tenet of microeconomic theory, the relation between competition and technical efficiency is less clear. Neoclassical models of profit-maximization subsume static cost-minimizing behavior regardless of market competitiveness, but traditional cost-of-service regulation may mitigate incentives for cost-minimization, and agency models of managerial behavior suggest possible scope for competition to influence cost-reducing effort choices. This paper explores the empirical effects of competition on technical efficiency in the context of electricity industry restructuring. Restructuring programs adopted by many U.S. states made utilities residual claimants to cost savings and increased their exposure to competitive markets. Using data on annual generating plant-level input demand, we find that municipally-owned plants, whose owners were for the most part unaffected by restructuring, experienced the smallest efficiency gains over the past decade, while investor-owned utility plants in restructured states significantly reduced their nonfuel operating expenses and employment. The analysis also highlights the substantive importance of treating the simultaneity of input and output decisions, which we do through an instrumental variables approach"--National Bureau of Economic Research web site. |
| Physical Description: | 56, 5 S. graph. Darst. |
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| geographic_facet | USA |
| id | DE-604.BV023591142 |
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| index_date | 2024-07-02T22:41:27Z |
| indexdate | 2024-07-09T21:25:10Z |
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| series | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| series2 | National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series |
| spelling | Markiewicz, Kira Verfasser aut Does competition reduce costs? assessing the impact of regulatory restructuring on U.S. electric generation efficiency Kira Markiewicz ; Nancy Rose ; Catherine Wolfram Cambridge, Mass. National Bureau of Economic Research 2004 56, 5 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 11001 "Although the allocative efficiency benefits of competition are a tenet of microeconomic theory, the relation between competition and technical efficiency is less clear. Neoclassical models of profit-maximization subsume static cost-minimizing behavior regardless of market competitiveness, but traditional cost-of-service regulation may mitigate incentives for cost-minimization, and agency models of managerial behavior suggest possible scope for competition to influence cost-reducing effort choices. This paper explores the empirical effects of competition on technical efficiency in the context of electricity industry restructuring. Restructuring programs adopted by many U.S. states made utilities residual claimants to cost savings and increased their exposure to competitive markets. Using data on annual generating plant-level input demand, we find that municipally-owned plants, whose owners were for the most part unaffected by restructuring, experienced the smallest efficiency gains over the past decade, while investor-owned utility plants in restructured states significantly reduced their nonfuel operating expenses and employment. The analysis also highlights the substantive importance of treating the simultaneity of input and output decisions, which we do through an instrumental variables approach"--National Bureau of Economic Research web site. Ökonometrisches Modell Competition Econometric models Electric utilities Economic aspects United States USA Rose, Nancy L. Verfasser (DE-588)129715816 aut Wolfram, Catherine Verfasser (DE-588)129715964 aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series 11001 (DE-604)BV002801238 11001 http://papers.nber.org/papers/w11001.pdf kostenfrei Volltext |
| spellingShingle | Markiewicz, Kira Rose, Nancy L. Wolfram, Catherine Does competition reduce costs? assessing the impact of regulatory restructuring on U.S. electric generation efficiency National Bureau of Economic Research <Cambridge, Mass.>: NBER working paper series Ökonometrisches Modell Competition Econometric models Electric utilities Economic aspects United States |
| title | Does competition reduce costs? assessing the impact of regulatory restructuring on U.S. electric generation efficiency |
| title_auth | Does competition reduce costs? assessing the impact of regulatory restructuring on U.S. electric generation efficiency |
| title_exact_search | Does competition reduce costs? assessing the impact of regulatory restructuring on U.S. electric generation efficiency |
| title_exact_search_txtP | Does competition reduce costs? assessing the impact of regulatory restructuring on U.S. electric generation efficiency |
| title_full | Does competition reduce costs? assessing the impact of regulatory restructuring on U.S. electric generation efficiency Kira Markiewicz ; Nancy Rose ; Catherine Wolfram |
| title_fullStr | Does competition reduce costs? assessing the impact of regulatory restructuring on U.S. electric generation efficiency Kira Markiewicz ; Nancy Rose ; Catherine Wolfram |
| title_full_unstemmed | Does competition reduce costs? assessing the impact of regulatory restructuring on U.S. electric generation efficiency Kira Markiewicz ; Nancy Rose ; Catherine Wolfram |
| title_short | Does competition reduce costs? |
| title_sort | does competition reduce costs assessing the impact of regulatory restructuring on u s electric generation efficiency |
| title_sub | assessing the impact of regulatory restructuring on U.S. electric generation efficiency |
| topic | Ökonometrisches Modell Competition Econometric models Electric utilities Economic aspects United States |
| topic_facet | Ökonometrisches Modell Competition Econometric models Electric utilities Economic aspects United States USA |
| url | http://papers.nber.org/papers/w11001.pdf |
| volume_link | (DE-604)BV002801238 |
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