The dynamics of efficiency and productivity growth in U.S. electric utilities
AbstractThis study recognizes explicitly the efficiency gain or loss as a source in explaining the growth. A theoretically consistent method to estimate the decomposition of dynamic total factor productivity growth (TFP) in the presence of inefficiency is developed which is constructed from an extension of the dynamic TFP growth, adjusted for deviations from the long-run equilibrium within an adjustment cost framework. The empirical case study is to U.S. electric utilities, which provides a measure to evaluate how different electric utilities participate in the deregulation of electricity generation. TFP grew by 2.26 percent per annum with growth attributed to the combined scale effects of 0.34 percent, the combined efficiency effects of 0.69 percent, and the technical change effect of 1.22 percent. The dynamic TFP grew by 1.66 percent per annum for electric utilities located within states with the deregulation plan and 3.30 percent per annum for those located outside. Electric utilities located within states with the deregulation plan increased the outputs by improving technical and input allocative efficiencies more than those located outside of states with deregulation plans.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Journal of Productivity Analysis.
Volume (Year): 30 (2008)
Issue (Month): 3 (December)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=100296
Productivity growth; Adjustment costs; Dynamic duality; Inefficiency; Decomposition; Deregulation; Electricity; D24; D92; L94;
Other versions of this item:
- Supawat Rungsuriyawiboon & Spyro Stefanou, 2004. "The Dynamics of Efficiency and Productivity Growth in U. S. Electric Utilities," Working Papers 0711, University of Crete, Department of Economics, revised 00 Aug 2006.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- McLaren, Keith R & Cooper, Russel J, 1980. "Intertemporal Duality: Application to the Theory of the Firm," Econometrica, Econometric Society, vol. 48(7), pages 1755-62, November.
- Markiewicz, K. & Rose, N.L. & Wolfram, C., 2004.
"Does Competition Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency,"
Cambridge Working Papers in Economics
0472, Faculty of Economics, University of Cambridge.
- Nancy L. Rose & Kira Markiewicz & Catherine Wolfram, 2004. "Does Competition Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency," Working Papers 0418, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Paul W. Bauer, 1988. "Decomposing TFP growth in the presence of cost inefficiency, nonconstant returns to scale, and technological progress," Working Paper 8813, Federal Reserve Bank of Cleveland.
- Timothy J. Considine, 2000. "Cost Structures for Fossil Fuel-Fired Electric Power Generation," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 83-104.
- Kira Markiewicz & Nancy L. Rose & Catherine Wolfram, 2004.
"Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency,"
NBER Working Papers
11001, National Bureau of Economic Research, Inc.
- Kira R. Fabrizio & Nancy L. Rose & Catherine D. Wolfram, 2007. "Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on US Electric Generation Efficiency," American Economic Review, American Economic Association, vol. 97(4), pages 1250-1277, September.
- Epstein, Larry G, 1981. "Duality Theory and Functional Forms for Dynamic Factor Demands," Review of Economic Studies, Wiley Blackwell, vol. 48(1), pages 81-95, January.
- Rungsuriyawiboon, Supawat & Stefanou, Spiro E., 2007.
"Dynamic Efficiency Estimation: An Application to U.S. Electric Utilities,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 25, pages 226-238, April.
- Supawat Rungsuriyawiboon & Spiro E. Stefanou, 2003. "Dynamic Efficiency Estimation: An Application to US Electric Utilities," CEPA Working Papers Series WP052003, School of Economics, University of Queensland, Australia.
- Epstein, Larry G & Denny, Michael G S, 1983. "The Multivariate Flexible Accelerator Model: Its Empirical Restrictions and an Application to U.S. Manufacturing," Econometrica, Econometric Society, vol. 51(3), pages 647-74, May.
- Jeffrey I. Bernstein & Theofanis P. Mamuneas & Panos Pashardes, 2004. "Technical Efficiency and U.S. Manufacturing Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 402-412, February.
- Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990.
"Production frontiers with cross-sectional and time-series variation in efficiency levels,"
Journal of Econometrics,
Elsevier, vol. 46(1-2), pages 185-200.
- Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1989. "Production Frontiers With Cross-Sectinal And Time-Series Variation In Efficiency Levels," Working Papers 89-18, C.V. Starr Center for Applied Economics, New York University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.