Deregulation, Consolidation, and Efficiency: Evidence from U.S. Nuclear Power
AbstractFor the first four decades of its existence the U.S. nuclear power industry was run by regulated utilities, with most companies owning only one or two reactors. Beginning in the late 1990s electricity markets in many states were deregulated and almost half of the nation’s 103 reactors were sold to independent power producers selling power in competitive wholesale markets. Deregulation has been accompanied by substantial market consolidation and today the three largest companies control more than one-third of all U.S. nuclear capacity. We find that deregulation and consolidation are associated with a 10 percent increase in operating efficiency, achieved primarily by reducing the frequency and duration of reactor outages. At average wholesale prices the value of this increased efficiency is approximately $2.5 billion annually and implies an annual decrease of almost 40 million metric tons of carbon dioxide emissions.
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Date of creation: Aug 2011
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- Lucas W. Davis & Catherine Wolfram, 2012. "Deregulation, Consolidation, and Efficiency: Evidence from US Nuclear Power," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 194-225, October.
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-08-29 (All new papers)
- NEP-COM-2011-08-29 (Industrial Competition)
- NEP-EFF-2011-08-29 (Efficiency & Productivity)
- NEP-ENE-2011-08-29 (Energy Economics)
- NEP-ENV-2011-08-29 (Environmental Economics)
- NEP-REG-2011-08-29 (Regulation)
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