Economies of scale in Norwegian electricity distribution: a quantile regression approach |
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Authors: | Ørjan Mydland Erik Haugom Gudbrand Lien |
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Affiliation: | 1. Faculty of Economics and Social Sciences, Inland Norway University of Applied Sciences, Lillehammer, Norway;2. Department of Business and Management Science, Norwegian School of Economics, Bergen, Norway |
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Abstract: | In this article, we investigate scale economies in Norwegian electricity distribution companies using a quantile regression approach. To the best of our knowledge, this is the first attempt to apply this estimation technique when analysing scale economies. We estimate the cost elasticities of the two output components: network length and number of customers, to calculate returns to scale. Our results show large potential of scale economies, particularly for the smallest companies. We also find that returns to scale is increasing over time. These findings have important implications for policymakers when they are deciding the structure of the industry in the future. |
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Keywords: | Norwegian electricity distribution companies policymakers economies of scale returns to scale quantile regression |
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