Do Markets Reduce Costs ? Assessing the Impact of Regulatory Restructuring on

  title={Do Markets Reduce Costs ? Assessing the Impact of Regulatory Restructuring on},
  author={Kira R. Fabrizio and Nancy L. Rose and Catherine Wolfram},
While neoclassical models assume static cost-minimization by firms, agency models suggest that firms may not minimize costs in less-competitive or regulated environments. We test this using a transition from cost-of-service regulation to market-oriented environments for many U.S. electric generating plants. Our estimates of input demand suggest that publicly-owned plants, whose owners were largely insulated from these reforms, experienced the smallest efficiency gains, while investor-owned… CONTINUE READING
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