Behavior of the firm: the US petroleum pipeline industry under regulatory constraint

Journal Article · Wed Apr 01 04:00:00 EST 1981 · Growth and Change; (United States)

DOI:https://doi.org/10.1111/j.1468-2257.1981.tb00444.x· OSTI ID:6432820

Piette, M J ^[1]; Desvousges, W H

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1. Univ. of Hartford, CT

The oil-pipeline industry is one of several that, historially, have been prime regulatory targets and, consequently, the target of considerable research on the apparent inefficiency of firms subject to rate-of-return regulation. The Averch and Johnson (A-J) test of this effect is applied for the first time to the oil-pipeline industry. The history of pipeline regulation is unique because the original-cost rate base is not regulated and because the maximum rates-of-return have not been reassessed since the 1940s. A model using the Cobb-Douglas production function produces results that are inconsistent with the A-J effect in that capital is not substituted for labor, possibly because the pipeline industry uses highly specialized labor. Other explanations could be that regulation has little effect on firm behavior or, more likely, that the difference is due to regulatory lag. Additional research is indicated to acquire enough less-aggregated data on the firm level. 31 references, 4 tables. (DCK)

• OSTI ID: 6432820
• Journal Information: Growth and Change; (United States), Journal Name: Growth and Change; (United States) Vol. 12:2; ISSN GRCHD
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
021000 -- Petroleum-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
294002* -- Energy Planning & Policy-- Petroleum
ECONOMETRICS
ECONOMIC ELASTICITY
ECONOMIC IMPACT
ECONOMICS
INDUSTRY
PETROLEUM INDUSTRY
PIPELINES
REGULATIONS