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Vertical and Horizontal Scope Economies in the Regulated U . S . Electric Power Industry
Author(s) -
Arocena Pablo,
Saal David S.,
Coelli Tim
Publication year - 2012
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/j.1467-6451.2012.00486.x
Subject(s) - economies of scope , scope (computer science) , horizontal and vertical , vertical integration , industrial organization , function (biology) , economics , economies of scale , economy , business , microeconomics , computer science , mathematics , geometry , evolutionary biology , biology , programming language
This paper investigates vertical economies between generation and distribution of electric power, and horizontal economies between different types of power generation in the U . S . electric utility industry. Our quadratic cost function model includes three generation output measures (hydro, nuclear and fossil fuels), which allows us to analyze the effect that generation mix has on vertical economies. Our results provide (sample mean) estimates of vertical economies of 8.1% and horizontal economies of 5.4%. An extensive sensitivity analysis is used to show how the scope measures vary across alternative model specifications and firm types.