We found a match
Your institution may have rights to this item. Sign in to continue.
- Title
The Electric Power Industry: An Econometric Model of Intertemporal Behavior.
- Authors
Gollop, Frank M.; Karlson, Stephen H.
- Abstract
The article focuses on the electric power industry. The academic literature has given much attention to the econometric evaluation of producer behavior in the electric power industry, especially the input bias. The overall objective is to generalize the empirical research applied to the electric power industry in one important dimension, one particularly relevant to economists Harvey Averch and Leland L. Johnson thesis. An applied intertemporal model of producer behavior. While past investigations employ various functional forms and quite distinct data sets, they universally adopt single period models. Each views the firm's optimization problem as if it were a long run decision at each point in time. Capital in any period is assumed fully variable, its level independent of all past and future investment decisions. In reality, the long economic lives of plant and equipment require that the modeled optimization process reflect an intertemporal rather than single period structure. Consequently, parameter estimates and inferences regarding input distortion derived from single period models assuming long run equilibrium may be biased substantially. Formally, this hypothesis follows directly from economic theory.
- Subjects
ECONOMETRICS; ELECTRIC utilities; ELECTRIC industries; EMPIRICAL research; INVESTMENTS; MATHEMATICAL models
- Publication
Land Economics, 1980, Vol 56, Issue 3, p299
- ISSN
0023-7639
- Publication type
Article
- DOI
10.2307/3146033