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AN EMPIRICAL EXAMINATION OF THE AVERCH‐JOHNSON EFFECT
Author(s) -
BOYES WILLIAM J.
Publication year - 1976
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1976.tb00374.x
Subject(s) - economics , econometrics , function (biology) , production (economics) , capital (architecture) , a priori and a posteriori , empirical examination , microeconomics , electric power industry , electric power , power (physics) , classical economics , electricity , engineering , physics , electrical engineering , history , philosophy , archaeology , epistemology , quantum mechanics , evolutionary biology , biology
In this paper the Averch‐Johnson thesis of a capital bias in regulated firms is examined empirically. This is accomplished by estimating a system of factor demand functions using individual plant data from the electric power industry. Results obtained do not provide support for the A‐J effect and it is suggested that there are a number of reasons this could have been expected a priori. finally, the implied parameters of the production function are derived and presented; the values are in line with other estimates of the production function for the electric power industry.