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Determinants of Research and Development Activity by Electric Utilities


  • Ronald P. Wilder
  • Stanley R. Stansell


This paper develops a model of the determinants of R&D outlays of privately owned electric utilities and tests the model empirically with data for the years 1968 through 1970. The findings are that R&D outlays have an elasticity greater than one with respect to firm size, and are positively associated but relatively inelastic with respect to profitability. These results suggest that increasing firm size, either through merger or internal growth would have a favorable effect on R&D outlays. The results also imply that an increase in the regulated rate of return would not be an effective way to increase utility R&D outlays. There is no significant difference between the R&D behavior of utilities which do not fall under state regulation and those which are regulated.

Suggested Citation

  • Ronald P. Wilder & Stanley R. Stansell, 1974. "Determinants of Research and Development Activity by Electric Utilities," Bell Journal of Economics, The RAND Corporation, vol. 5(2), pages 646-650, Autumn.
  • Handle: RePEc:rje:bellje:v:5:y:1974:i:autumn:p:646-650

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    References listed on IDEAS

    1. Baron, David P, 1970. "Price Uncertainty, Utility, and Industry Equilibrium in Pure Competition," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(3), pages 463-480, October.
    2. Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
    3. Steinar Ekern & Robert Wilson, 1974. "On the Theory of the Firm in an Economy with Incomplete Markets," Bell Journal of Economics, The RAND Corporation, vol. 5(1), pages 171-180, Spring.
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    Cited by:

    1. Evens Salies & Lionel Nesta, 2010. "Libéralisation et dépôts de brevets verts des utilités électriques en Europe," Documents de Travail de l'OFCE 2010-21, Observatoire Francais des Conjonctures Economiques (OFCE).
    2. Costa-Campi, M.T. & Duch-Brown, N. & García-Quevedo, J., 2014. "R&D drivers and obstacles to innovation in the energy industry," Energy Economics, Elsevier, vol. 46(C), pages 20-30.
    3. Schmitt, Stephan & Kucsera, Denes, 2013. "The Impact of the Regulatory Reform Process on R&D Investment of European Electricity Utilities," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80035, Verein für Socialpolitik / German Economic Association.
    4. Evens Salies, 2010. "A Test of the Schumpeterian Hypothesis in a Panel of European Electric Utilities," Chapters,in: Innovation, Economic Growth and the Firm, chapter 6 Edward Elgar Publishing.
    5. Jamasb, Tooraj & Pollitt, Michael, 2008. "Liberalisation and R&D in network industries: The case of the electricity industry," Research Policy, Elsevier, vol. 37(6-7), pages 995-1008, July.
    6. repec:spo:wpecon:info:hdl:2441/eu4vqp9ompqllr09hc033ieaj is not listed on IDEAS

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