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Sources total factor productivity in the electric utility industry

Thesis/Dissertation ·
OSTI ID:7036805
This dissertation provides empirical insight into the structure of the electric utility industry with a view toward drawing conclusions about the industry's declining total factor productivity (TFP) growth in the 1970's. Two methodologies were employed to investigate the sources of the industry's declining TFP growth; (1) a first-order TFP decomposition based on index number measurements; and (2) a second-order TFP decomposition based on the estimation of a translog cost function of the industry. The measurements and decomposition of TFP employ recent advances in the theory of index numbers, duality theory and the use of flexible functional form econometric specifications. The TFP decomposition is a result of an examination of the relationship between output growth and productivity growth. The most consistent and significant results of the analysis are; (1) electric utilities are still characterized by significant economies of scale with output growth contributing significantly to TFP growth; and (2) electric utilities hold large quantities of excess capital, the growth of which has significantly hurt TFP growth.
Research Organization:
Wisconsin Univ., Madison (USA)
OSTI ID:
7036805
Country of Publication:
United States
Language:
English