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Dual Measures of Monopoly and Monopsony Power: An Application to Regulated Electric Utilities

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  • Atkinson, Scott E
  • Kerkvliet, Joe

Abstract

The inefficiency from monopoly pricing, monopsony pricing, and other institutional factors should be simultaneously estimated to avoid misspecification. Estimation of a behavioral profit function, where input and output shadow prices may diverge from their market values, allows unbiased simultaneous estimation of inefficiencies if its normalized form is employed. In an application to electric utilities consuming western coal, the authors cannot reject the hypothesis that utilities act as price-takers in output markets and find weak and statistically insignificant evidence of fuel-adjustment-clause bias. Strong evidence is found of monopsony behavior in the market for western coal and its transportation. Copyright 1989 by MIT Press.

Suggested Citation

  • Atkinson, Scott E & Kerkvliet, Joe, 1989. "Dual Measures of Monopoly and Monopsony Power: An Application to Regulated Electric Utilities," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 250-257, May.
  • Handle: RePEc:tpr:restat:v:71:y:1989:i:2:p:250-57
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    Cited by:

    1. Brannlund, Runar & Lundgren, Tommy, 2004. "A dynamic analysis of interfuel substitution for Swedish heating plants," Energy Economics, Elsevier, vol. 26(6), pages 961-976, November.
    2. Curtis Carlson & Dallas Burtraw & Maureen Cropper & Karen L. Palmer, 2000. "Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1292-1326, December.
    3. Zhiqiang Liu, 2001. "Efficiency and Firm Ownership: Some New Evidence," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 19(4), pages 481-496, December.
    4. Bougette, Patrice & Budzinski, Oliver & Marty, Frédéric, 2017. "Exploitative abuse and abuse of economic dependence: What can we learn from the industrial organization approach?," Ilmenau Economics Discussion Papers 111, Ilmenau University of Technology, Institute of Economics.
    5. Jones, Rodney & Purcell, Wayne & Driscoll, Paul & Peterson, Everett, 1996. "Issues and Cautions in Employing Behavioral Modeling Approaches to Test for Market Power," Staff Papers 232517, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    6. Guido Cella & Giovanni Pica, 2001. "Inefficiency Spillovers in Five OECD Countries: An Interindustry Analysis," Economic Systems Research, Taylor & Francis Journals, vol. 13(4), pages 405-416.
    7. Kellie Curry Raper & H. Alan Love & C. Richard Shumway, 2000. "Determining market power exertion between buyers and sellers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(3), pages 225-252.
    8. Sjöström, Magnus, 2004. "Biofuels and Market Power - The Case of Swedish District Heating Plants," Umeå Economic Studies 634, Umeå University, Department of Economics.
    9. repec:eee:enepol:v:106:y:2017:i:c:p:148-154 is not listed on IDEAS
    10. Ronchi, Loraine, 2006. "Fairtrade and market failures in agricultural commodity markets," Policy Research Working Paper Series 4011, The World Bank.
    11. Lynk, E. L., 1995. "Testing efficiency in intermediate regulated industries," Economics Letters, Elsevier, vol. 49(3), pages 323-328, September.
    12. Brännlund, Runar & Marklund, Per-Olov & Sjöström, Magnus, 2001. "Evaluating market efficiency without price data. The Swedish market for wood fuel," Umeå Economic Studies 576, Umeå University, Department of Economics.
    13. Sjöström, Magnus, 2004. "Factor Demand and Market Power," Umeå Economic Studies 633, Umeå University, Department of Economics.
    14. repec:ags:vtaesp:232464 is not listed on IDEAS

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