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Economies of scale in Norwegian electricity distribution: a quantile regression approach

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  • Ørjan Mydland
  • Erik Haugom
  • Gudbrand Lien

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.

Suggested Citation

  • Ørjan Mydland & Erik Haugom & Gudbrand Lien, 2018. "Economies of scale in Norwegian electricity distribution: a quantile regression approach," Applied Economics, Taylor & Francis Journals, vol. 50(40), pages 4360-4372, August.
    • Handle: RePEc:taf:applec:v:50:y:2018:i:40:p:4360-4372
    DOI: 10.1080/00036846.2018.1450481
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    Cited by:

    1. Mydland, Ørjan & Kumbhakar, Subal C. & Lien, Gudbrand & Amundsveen, Roar & Kvile, Hilde Marit, 2020. "Economies of scope and scale in the Norwegian electricity industry," Economic Modelling, Elsevier, vol. 88(C), pages 39-46.
    2. Mauler, Lukas & Duffner, Fabian & Leker, Jens, 2021. "Economies of scale in battery cell manufacturing: The impact of material and process innovations," Applied Energy, Elsevier, vol. 286(C).
    3. Musau, Andrew & Kumbhakar, Subal C. & Mydland, Ørjan & Lien, Gudbrand, 2021. "Determinants of allocative and technical inefficiency in stochastic frontier models: An analysis of Norwegian electricity distribution firms," European Journal of Operational Research, Elsevier, vol. 288(3), pages 983-991.
    4. Jiawen Zhang & Zhiyi Liang & Toru Matsumoto & Tiejia Zhang, 2022. "Environmental and Economic Implication of Implementation Scale of Sewage Sludge Recycling Systems Considering Carbon Trading Price," Sustainability, MDPI, vol. 14(14), pages 1-16, July.
    5. Hou, Zheng & Roseta-Palma, Catarina & Ramalho, Joaquim J.S., 2024. "Can operational efficiency in the Portuguese electricity sector be improved? Yes, but..," Energy Policy, Elsevier, vol. 190(C).

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