Powering Progress: Restructuring, Competition, and R&D in the U.S. Electric Utility Industry
AbstractThis paper investigates the R&D behavior of regulated firms when they transition to a competitive environment. Using data from the US electricity market from 1990-2000, we analyze how competition, institutional changes, and political constraints have contributed to the precipitous decline in R&D expenditure by regulated utilities. We find that firms reduce their R&D significantly at the very early stages of restructuring or even when they expect restructuring to occur. Once the emerging institutional structure becomes clear, R&D spending recovers but is later offset by another decline when restructuring legislation is enacted. In addition, greater competition and the nearing of such competition adversely affects research spending. In aggregate, R&D declines by 78.6 percent after electricity markets are restructured. Firm and state characteristics matter, and a majority of the research is conducted by large generation companies located in pro-research states, especially if they are part of a larger holding company. Such characteristics have a different impact on research spending in the pre-and post-restructured periods.
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Bibliographic InfoArticle provided by International Association for Energy Economics in its journal The Energy Journal.
Volume (Year): Volume 30 (2009)
Issue (Month): Number 2 ()
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- F0 - International Economics - - General
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- Nesta, Lionel & Vona, Francesco & Nicolli, Francesco, 2014.
"Environmental policies, competition and innovation in renewable energy,"
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- Lionel Nesta & Francesco Vona & Francesco Nicolli, 2012. "Environmental Policies, Product Market Regulation and Innovation in Renewable Energy," Working Papers 2012.90, Fondazione Eni Enrico Mattei.
- Maria Teresa Costa-Campi & Néstor Duch-Brown & José García-Quevedo, 2013. "R&D drivers and obstacles to innovation in the energy industry," Working Papers 2013/23, Institut d'Economia de Barcelona (IEB).
- Ohler, Adrienne M., 2014. "Behavior of the firm under rate-of-return regulation with two capital inputs," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(1), pages 61-69.
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