NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency

Kira Markiewicz, Nancy L. Rose, Catherine Wolfram

NBER Working Paper No. 11001
Issued in December 2004
NBER Program(s):   IO   PR   EEE

While neoclassical models assume static cost-minimization by firms, agency models suggest that firms may not minimize costs in less-competitive or regulated environments. We test this using a transition from cost-of-service regulation to market-oriented environments for many U.S. electric generating plants. Our estimates of input demand suggest that publicly-owned plants, whose owners were largely insulated from these reforms, experienced the smallest efficiency gains, while investor-owned plants in states that restructured their wholesale electricity markets improved the most. The results suggest modest medium-term efficiency benefits from replacing regulated monopoly with a market-based industry structure.

download in pdf format
   (243 K)

email paper

This paper is available as PDF (243 K) or via email.

A data appendix is available at http://www.nber.org/data-appendix/w11001

This paper was revised on June 28, 2007

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w11001

Published: Fabrizio, Kira, Nancy Rose and Catherine Wolfram. "Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency.” American Economic Review 97 (September 2007): 1250-1277. citation courtesy of

Users who downloaded this paper also downloaded these:
Bushnell, Mansur, and Saravia w13507 Vertical Arrangements, Market Structure, and Competition An Analysis of Restructured U.S. Electricity Markets
Davis and Wolfram w17341 Deregulation, Consolidation, and Efficiency: Evidence from U.S. Nuclear Power
Joskow Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks
Syverson w15712 What Determines Productivity?
Borenstein and Bushnell w6463 An Empirical Analysis of the Potential for Market Power in California's Electricity Industry
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us