The impact of deregulation and corporate structure on productive efficiency: The case of the U.S. electric utility industry, 1990–2004

Abstract

We present empirical evidence on the productive efficiency of electric utilities in the United States from 1990 to 2004. This period is marked by major attempts to introduce deregulation with an expectation that it will lead to improved operating efficiency and ultimately to lower consumer prices. However, relying on improved techniques of estimating productive efficiency, we find that firms in jurisdictions that adopted deregulation have in fact lower productive efficiency, and have also experienced decreases in efficiency over time. In particular, the vertical separation of generation, a hallmark of an effort to deregulate the industry, is associated with an adverse impact on productive efficiency.

Citation

Goto, M. and Makhija, A.K. (2009), "The impact of deregulation and corporate structure on productive efficiency: The case of the U.S. electric utility industry, 1990–2004", Hirschey, M., John, K. and Makhija, A.K. (Ed.) Corporate Governance and Firm Performance (Advances in Financial Economics, Vol. 13), Emerald Group Publishing Limited, Leeds, pp. 1-34. https://doi.org/10.1108/S1569-3732(2009)0000013003