TY - JOUR
T1 - Economies of scale and technological progress in electric power production
T2 - The case of Brazilian utilities
AU - Machado, Mauricio Marins
AU - de Sousa, Maria Conceição Sampaio
AU - Hewings, Geoffrey
N1 - Publisher Copyright:
© 2016 Elsevier B.V.
PY - 2016/9/1
Y1 - 2016/9/1
N2 - This paper examined the cost structure of the electricity generation companies in Brazil during the period 2000–2010 by using a translog cost function that imposes no restrictions on production technology and allows for the existence of non-homotheticity. The hypothesis that economies of scale are a typical feature of the generation market in Brazil and, in general, are not exhausted at lower levels of production is not rejected. This result supports the vision that indivisibilities restrict efficiency gains from free-market competition in the Brazilian electricity generation and most of the last restructuring in the industry regulation was based on this assumption. Furthermore, over the sample period, technological progress led to cost reductions in electric power supply. These technological improvements take the form of both a neutral technological effect as well as a non-neutral fuel effect, which prevails over the capital and labor saving technical changes.
AB - This paper examined the cost structure of the electricity generation companies in Brazil during the period 2000–2010 by using a translog cost function that imposes no restrictions on production technology and allows for the existence of non-homotheticity. The hypothesis that economies of scale are a typical feature of the generation market in Brazil and, in general, are not exhausted at lower levels of production is not rejected. This result supports the vision that indivisibilities restrict efficiency gains from free-market competition in the Brazilian electricity generation and most of the last restructuring in the industry regulation was based on this assumption. Furthermore, over the sample period, technological progress led to cost reductions in electric power supply. These technological improvements take the form of both a neutral technological effect as well as a non-neutral fuel effect, which prevails over the capital and labor saving technical changes.
KW - Panel model
KW - Power supply
KW - Scale economies
KW - Seemingly unrelated regressions
KW - Technical change
KW - Translog function
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U2 - 10.1016/j.eneco.2016.06.017
DO - 10.1016/j.eneco.2016.06.017
M3 - Article
AN - SCOPUS:84985904975
VL - 59
SP - 290
EP - 299
JO - International Journal of Biological Macromolecules
JF - International Journal of Biological Macromolecules
SN - 0141-8130
ER -