Costs of Nuclear Power Plant Construction: Theory and New Evidence

John M. Marshall and Peter Navarro

RAND Journal of Economics, 1991, vol. 22, issue 1, 148-154

Abstract: Studies of the cost of construction of nuclear power plants rely upon a measure of cost, called "overnight cost," that contradicts accepted capital theory. The studies report evidence that construction cost per megawatt of capacity decreases as plant scale increases. We employ a more correct measure of cost and compare the results of this measure versus overnight cost for Japanese nuclear power plants. Using overnight cost, the results give "evidence" of economies of scale in Japanese power plants, but when the correct measure of cost is substituted, the scale variable is not statistically significant.

Date: 1991
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