The Dynamics of Efficiency and Productivity Growth in U. S. Electric Utilities

Supawat Rungsuriyawiboon and Spiro Stefanou
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Supawat Rungsuriyawiboon: Chiang Mai University

No 711, Working Papers from University of Crete, Department of Economics

Abstract: This study recognizes explicitly the efficiency gain or loss as a source in explaining the growth. A theoretically consistent method to estimate the decomposition of dynamic total factor productivity growth (TFP) in the presence of inefficiency is developed which is constructed from an extension of the dynamic TFP growth, adjusted for deviations from the long-run equilibrium within an adjustment cost framework. The empirical case study is to U.S. electric utilities, which provides a measure to evaluate how different electric utilities participate in the deregulation of electricity generation. TFP grew by 2.26 percent per annum with growth attributed to the combined scale effects of 0.34 percent, the combined efficiency effects of 0.69 percent, and the technical change effect of 1.22 percent. The dynamic TFP grew by 1.66 percent per annum for electric utilities located within states with the deregulation plan and 3.30 percent per annum for those located outside. Electric utilities located within states with the deregulation plan increased the outputs by improving technical and input allocative efficiencies more than those located outside of states with deregulation plans.

Keywords: productivity growth; adjustment costs; dynamic duality; inefficiency; decomposition; deregulation; e (search for similar items in EconPapers)
JEL-codes: D24 D92 L94 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2004-07-00, Revised 2006-08
New Economics Papers: this item is included in nep-eff and nep-ene
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http://economics.soc.uoc.gr/wpa/docs/Dynamics_of_Effic_&_Prod_Growth.pdf Revised version (application/pdf)

Related works:
Journal Article: The dynamics of efficiency and productivity growth in U.S. electric utilities (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:crt:wpaper:0711

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