Vertical and horizontal scope economies in the regulated US electricity power industry

Pablo Arocena, David S. Saal, Tim Coelli

Research output: Contribution to journalArticle

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.
Original languageEnglish
Pages (from-to)434-467
Number of pages34
JournalJournal of Industrial Economics
Volume60
Issue number3
DOIs
Publication statusPublished - Sep 2012

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