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- Title
Economies of Density and Size in the Production and Delivery of Electric Power.
- Authors
Roberts, Mark J.
- Abstract
This article focuses on the economies of density and size in the production and delivery of electric power. The measures, which recognize the different ways in which output changes can occur, are used to analyze firm differences in the average cost of supplying electric power. A change in the quantity of electricity supplied by a firm will have a different impact on cost depending on whether the output is supplied to existing customers or to an increased number of customers. Significant reductions in ray average cost result from increasing output to existing customers while no substantial savings occur when serving an increased number of customers. This latter result occurs because the reduction in ray average cost due to an increase in output is offset by an upward shift in the average cost curve resulting from an increase in the number of customers. On average, a one percent increase in output reduces ray average cost by .175 percent while a one percent increase in the number of customers raises average cost by .161 percent. The net effect on ray average cost of an increase in customer density, holding output per customer fixed, is virtually zero.
- Subjects
ELECTRIC power; ECONOMIES of scale; SUPPLY-side economics; DENSITY; CONSUMERS; ELECTRIC lines
- Publication
Land Economics, 1986, Vol 62, Issue 4, p378
- ISSN
0023-7639
- Publication type
Article
- DOI
10.2307/3146470