Vertical and Horizontal Scope Economies in the Regulated U.S. Electric Power Industry

34 Pages Posted: 18 Oct 2012

See all articles by Pablo Arocena

Pablo Arocena

Universidad Pública de Navarra

David S. Saal

Aston University - Aston Business School

Tim Coelli

University of Queensland - Centre for Efficiency and Productivity Analysis (CEPA)

Date Written: September 2012

Abstract

This paper investigates vertical economies between generation and distribution of electric power, and horizontal economies between different types of power generation in the U.S. electric utility industry. Our quadratic cost function model includes three generation output measures (hydro, nuclear and fossil fuels), which allows us to analyze the effect that generation mix has on vertical economies. Our results provide (sample mean) estimates of vertical economies of 8.1% and horizontal economies of 5.4%. An extensive sensitivity analysis is used to show how the scope measures vary across alternative model specifications and firm types.

Suggested Citation

Arocena Garro, Pablo and Saal, David S. and Coelli, Tim, Vertical and Horizontal Scope Economies in the Regulated U.S. Electric Power Industry (September 2012). The Journal of Industrial Economics, Vol. 60, Issue 3, pp. 434-467, 2012. Available at SSRN: https://ssrn.com/abstract=2163381 or http://dx.doi.org/10.1111/j.1467-6451.2012.00486.x

Pablo Arocena Garro (Contact Author)

Universidad Pública de Navarra ( email )

Dpto. Gestión de Empresas
Campus of Arrosadia
31006 Pamplona, Navarra 31006
Spain
+34 948169684 (Phone)
+34 948169404 (Fax)

David S. Saal

Aston University - Aston Business School ( email )

Aston Triangle
Birmingham, B47ET
United Kingdom

Tim Coelli

University of Queensland - Centre for Efficiency and Productivity Analysis (CEPA) ( email )

St. Lucia
Brisbane, Queensland 4072
Australia
+61 7 33656470 (Phone)
+61 7 33657299 (Fax)

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