Estimation of a Q-ratio function for regulated electric utilities: a test of the Stigler-Peltzman hypothesis of regulatory behavior

Thesis/Dissertation · Tue Jan 01 00:00:00 EST 1985

OSTI ID:5505367

Goodfriend, S J

The dissertation develops a static model of regulatory equilibria incorporating the Stigler-Peltzman theory of regulatory behavior. The model is used to test empirically the relationship between profitability of the regulated electric utility as measured by the q-ratio, and parameters of the firm's cost and demand functions and the regulator's welfare function. Sample data for 1976, 1977, and 1978 are developed for observations taken from the 100 investor-owned electric utilities followed by Salomon Brothers. Two dependent variables serve as empirical proxies for the theoretical q-ratio. These measures are an empirical q-ratio and the market-to-book ratio of equity. A basic empirical model is selected and tested by ordinary least squares and bounded influence regression. General findings are that the significance of the estimated model is highly sensitive to choice of dependent variable. Only market to book ratio regressions are statistically significant. Among market to book ratio regression, model significance is sensitive to sample year. The 1976 sample produces the most significant model. Regression results, when statistically significant, support the Stigler-Peltzman hypothesis.

• Research Organization: North Carolina Univ., Chapel Hill (USA)
• OSTI ID: 5505367
• Resource Relation: Other Information: Thesis (Ph. D.)
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING
POLICY AND ECONOMY
ELECTRIC UTILITIES
REGULATIONS
COST
LEAST SQUARE FIT
PROFITS
REGRESSION ANALYSIS
SUPPLY AND DEMAND
MATHEMATICS
MAXIMUM-LIKELIHOOD FIT
NUMERICAL SOLUTION
PUBLIC UTILITIES
STATISTICS
296000* - Energy Planning & Policy- Electric Power
293000 - Energy Planning & Policy- Policy
Legislation
& Regulation