Technology and Scale in Electricity Generation

The question of returns to scale in public utilities is a much debated issue. In this study, the productive process of electricity generation is examined and a modified substitution model is employed, permitting differentiation between returns to scale to labor and to other factors. The method employed here allows us to isolate the impact of technological progress on (steam) electricity generation. We find that increasing returns to scale prevail throughout, and that the main impact of technology was registered during the 1950's. This study covers the period 1937-59.