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.
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Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 0711.
Length: 30 pages
Date of creation: 00 Jul 2004
Date of revision: 00 Aug 2006
productivity growth; adjustment costs; dynamic duality; inefficiency; decomposition; deregulation; e;
Other versions of this item:
- Supawat Rungsuriyawiboon & Spiro Stefanou, 2008. "The dynamics of efficiency and productivity growth in U.S. electric utilities," Journal of Productivity Analysis, Springer, vol. 30(3), pages 177-190, December.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Financing, Investment, and Capacity
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-10 (All new papers)
- NEP-EFF-2007-02-10 (Efficiency & Productivity)
- NEP-ENE-2007-02-10 (Energy Economics)
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