Deregulation and Resource Reconfiguration in the Electric Utility Industry

University of California Energy Institute, Energy Policy and Economics Working Paper No. 012

50 Pages Posted: 21 Apr 2005

See all articles by Magali A. Delmas

Magali A. Delmas

University of California, Los Angeles (UCLA)

Michael V. Russo

University of Oregon - Department of Management

Maria J. Montes-Sancho

University of California, Santa Barbara

Date Written: April 2005

Abstract

This paper analyzes how economic deregulation impacts resource reconfiguration in the electric utility industry. We argue that to understand strategic change in this industry, we need to understand how development and deployment of a firm's resources reflects path dependencies that nonmarket actors impose on firms. We find evidence that the deregulation introduced to this historically staid industry has stimulated environmental differentiation strategies for incumbent firms. Consistent with theories that suggest differentiation is most likely to appear where its point of uniqueness is valued by customers, utilities engaged in differentiation if they served states whose populace exhibited a higher level of environmental sensitivity. The tendency for firms to differentiate is lessened if they are relatively more dependent on coal-fired generation or relatively more efficient. In both of these cases, the variables are associated with lower operating costs, in turn demonstrating that firms sort themselves into either differentiation or low cost strategies as their environments reflect more market-like segmentation in a deregulated world. This paper contributes to the resource based view of the firm by highlighting the importance of the nonmarket context in which resources are developed and leveraged.

Keywords: deregulation, nonmarket environment, environmental performance, environmental differentiation, renewable energy, resource based view, electric utility

JEL Classification: D21, L51, K23, L11, L50, L94, L97, L98, Q20, Q48

Suggested Citation

Delmas, Magali A. and Russo, Michael V. and Montes-Sancho, Maria J., Deregulation and Resource Reconfiguration in the Electric Utility Industry (April 2005). University of California Energy Institute, Energy Policy and Economics Working Paper No. 012. Available at SSRN: https://ssrn.com/abstract=699761 or http://dx.doi.org/10.2139/ssrn.699761

Magali A. Delmas (Contact Author)

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

Michael V. Russo

University of Oregon - Department of Management ( email )

1208 University of Oregon
Eugene, OR 97403-1208
United States
541-346-5182 (Phone)

Maria J. Montes-Sancho

University of California, Santa Barbara ( email )

Bren School Environmental Science & Management
3518 Bren Hall
Santa Barbara, CA 93106-5131
United States
805-893-8485 (Phone)

HOME PAGE: http://www.bren.ucsb.edu/people/usernew.asp?user=montes

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