Capital Vintage, Time Trends, and Technical Change in the Electric Power Industry

Nelson, Randy A.

doi:10.2307/1059416

Cited by 20 publications

(12 citation statements)

References 30 publications

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“…nonneutral technical change or $ q&r In Pk), and k effects associated with changes in outputs (scale augmenting technical change or g 8i, In Qi). A number of recent studies in the electric utilities area havd suggested that, while the rate of technical change obtained using the time trend is probably accurate when evaluated at the mean of a time series data set, it will poorly reflect the year-to-year variation in technical change when this process is not constant or smoothly increasing or decreasing(Kopp and Smith, 1983;Nelson, 1986). Because of the-dearth of indicators of technical advance in banking, two other alternative representations of technical change are also estimated: an index approach and shifts in crosssection cost functions.…”

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confidence: 99%

Cost and technical change: Effects from bank deregulation

Humphrey

1993

J Prod Anal

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Banks were substantially deregulated during the 1980s. Interest costs rose faster than operating expenses (capital, labor) were reduced. As a result, measured technical change in banking was negative: it averaged-0.8% to-1.4% a year over 1977-88. Technical change was measured three different ways and for both equilibrium and disequilibrium factor input specifications. All three approaches-a standard time trend, an index approach, and shifts in cross-section cost functions-gave consistent results. These results were robust whether measured at the banking firm or office level, or at the cost frontier.

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confidence: 99%

Cost and technical change: Effects from bank deregulation

Humphrey

1993

J Prod Anal

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“…The index usually chosen, the age of the plant, implicitly assumes that new technology is embodied in newly constructed plant. This assumption has generally been supported (see Nelson, 1986, for a summary and extension of this iiterature). In a preliminary model, we included plant age as a surrogate variable for vintage but found it to be highly correlated with many of the other independent variables.…”

Section: The Empitical Spmfication Of the Modclmentioning

confidence: 71%

Economies of Scale and Utilization: An Analysis of the Multi‐Plant Generation Costs of the Electricity Commission of New South Wales, 1970/71–1984/85*

Bateson

Swan

1989

Economic Record

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We examine the average costs of electricity generated in NSW at the site level employing a new simultaneous‐equations model approach Further, we argue that costs depend principally on unit size and capacity utilization We reinterpret capacity utilization as a compositional variable which is a continuous proxy for the (inverse of) the intensity of demand for electricity, thus partially addressing the multi‐product nature of electricity. Low capacity utilization corresponds to intense demands and hence peaking output We find that costs per kWh, as conventionally measured, are highly sensitive to the degree of capacity utilization but less so to unit size (scale). The results emphasize the need for tine‐related pricing

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“…A final study to complete this brief survey of developments on modeling electric production is Nelson's (1986). Nelson specified explicitly a cost function under a rate-of-return constraint, coupled with a more general specification of the sources of technical changeboth secular or time effects and vintaging effects were permitted.…”

Section: A Survey Of Studies On Production and Technicalmentioning

confidence: 99%

The specification and estimation of technological change in electricity production

Kavanaugh¹,

Ashton²

1995

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DISCLAIMERPortions of this document may be illegible in electronic image products. Images are produced from the best available original document.This study focuses on the rate of technological change in electricity production. The dominant role of fossil fuel-fired electricity production in the industry, coupled with the direct association with the emission of greenhouse gases, makes technology parameters particularly significant for several reasons. First, very long-run simulations of energy-economic paths at a global level require that technical progress occupy a place in the methodology for sound formulations that are vital in global emissions/energy policy analysis. Second, given the outlook for electricity generation being predominately coal-based, especially in developing economies around the world, the specification and measurement of technical change is essential for developing realistic long-run technology forecasts. Finally, industry or sector growth in productivity hinges partly on technical progress, and updated analysis will always be necessary to stay abreast of developments on this front, as well as for economic growth considerations in general.This study is based on empirical economic research on production functions in the electric utility industry. However, it advances a seldom used approach, called the "engineeringproduction function," in contrast to the more common neoclassical approach used by economists.Combined with this approach is a major departure from the type of data used to conduct econometric estimations of production parameters. This research draws upon a consistent set of ex ante or "blueprint" data that better reflects planned, technical performance and cost data elements, in contrast to the more customary, expost type of data from actual h / p l a n t operations.The results from the examination of coal-fired technologies indicate the presence of tech-Ncal change. Using data for the period from 1979 to 1989, we find technical change to be capital-augmenting at the rate of 1.8 percent per year. Technical advance diminishes fuel inputs, however. (Labor factors of production are not present in the specifiitions, given their very low cost share in the cost of installation and production.) The composite rate of technical progress is found to be 0.7 percent per year. Our estimates fall within the range of other studies, which are briefly reviewed in the report. This study is sponsored by internal Laboratory resources under the direction of the Global Studies Program.iii

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Capital Vintage, Time Trends, and Technical Change in the Electric Power Industry

Cited by 20 publications

References 30 publications

Cost and technical change: Effects from bank deregulation

Cost and technical change: Effects from bank deregulation

Economies of Scale and Utilization: An Analysis of the Multi‐Plant Generation Costs of the Electricity Commission of New South Wales, 1970/71–1984/85*

The specification and estimation of technological change in electricity production

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