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Private Ownership Form and Productive Efficiency: Electric Cooperatives versus Investor-Owned Utilities

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  • Berry, Dan Michael

Abstract

Property rights theory predicts that private firms whose ownership shares are not tradable will not be managed efficiently. This paper tests that theory by comparing the costs of rural electric cooperatives (RECs) and investor-owned electric utilities (IOUs). Separate translog cost functions are estimated for the RECs and the IOUs. The estimated costs of producing several three-product output bundles are then compared across ownership form under the assumption that all firms face identical input prices. The empirical results suggest that the cooperative sector of the electric power industry produces its output in a much less efficient manner than does the investor-owned sector. Copyright 1994 by Kluwer Academic Publishers

Suggested Citation

  • Berry, Dan Michael, 1994. "Private Ownership Form and Productive Efficiency: Electric Cooperatives versus Investor-Owned Utilities," Journal of Regulatory Economics, Springer, vol. 6(4), pages 399-420, December.
  • Handle: RePEc:kap:regeco:v:6:y:1994:i:4:p:399-420
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    Cited by:

    1. Holstenkamp, Lars & Degenhart, Heinrich, 2013. "Bürgerbeteiligungsmodelle für erneuerbare Energien - Eine Begriffsbestimmung aus finanzwirtschaftlicher Perspektive [Citizen Participation Schemes for Renewable Energies - A Definition from a Finan," MPRA Paper 81263, University Library of Munich, Germany.
    2. Wang, J.H. & Ngan, H.W. & Engriwan, W. & Lo, K.L., 2007. "Performance based regulation of the electricity supply industry in Hong Kong: An empirical efficiency analysis approach," Energy Policy, Elsevier, vol. 35(1), pages 609-615, January.
    3. Jamasb, T. & Pollitt, M., 2001. "Benchmarking and Regulation of Electricity Transmission and Distribution Utilities: Lessons from International Experience," Cambridge Working Papers in Economics 0101, Faculty of Economics, University of Cambridge.
    4. Laura Abrardi & Luca Colombo & Pier Angelo Mori, 2016. "Customer Ownership And Quality Provision In Public Services Under Asymmetric Information," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1499-1518, July.
    5. Mota, R.L., 2004. "‘Comparing Brazil and USA electricity performance; what was the impact of privatisation?’," Cambridge Working Papers in Economics 0423, Faculty of Economics, University of Cambridge.
    6. Lehto, Eero, 2011. "Electricity prices in the Finnish retail market," Energy Policy, Elsevier, vol. 39(4), pages 2179-2192, April.
    7. Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
    8. Greer, Monica Lynne, 2003. "Can rural electric cooperatives survive in a restructured US electric market? An empirical analysis," Energy Economics, Elsevier, vol. 25(5), pages 487-508, September.
    9. Mark A. Jamison, 2011. "Liberalization and Regulation of Telecoms, Electricity, and Gas in the United States," Chapters, in: Matthias Finger & Rolf W. Künneke (ed.),International Handbook of Network Industries, chapter 21, Edward Elgar Publishing.

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