Abstract
We estimate a regulated cost function to examine the contributions of technical change, scale economies, and regulatory bias to productivity growth in an eleven-year, twenty-firm panel of interstate natural gas pipeline companies. We derive the unregulated cost function from the regulated cost function to produce estimates of movements in the unconstrained production technology. We find that the regulation constraint is binding in most years and that scale economies explain 38 percent more growth in the unconstrained production space than they do in the regulation-constrained production space.
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We are grateful to Gary Biglaiser, David Guilkey, C. A. Knox Lovell, and Helen Tauchen for their suggestions, and to Karen Bauer, Philip Budzik, Ronald Colter, and Mary Streitwieser for their assistance in compiling the data sample. We are also grateful to the participants at the Georgia Productivity Workshop and two anonymous referees for their comments and suggestions.
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Granderson, G., Linvill, C. The impact of regulation on productivity growth: An application to the transmission sector of the interstate natural gas industry. J Regul Econ 10, 291–306 (1996). https://doi.org/10.1007/BF00157674
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DOI: https://doi.org/10.1007/BF00157674