Cost structures for fossil fuel-fired electric power generation

This paper estimates short- and long-run marginal production costs and retu rns to scale in electric power generation in the United States. We find sub stantial short-run diseconomies of scale at high output levels. A relativel y large number of small and mid-sized firms have optimal capital stocks bel ow actual levels. In contrast, several large firms have optimal capital sto cks targets substantially above current levels. These disparities in actual and optimal capital suggest a possible consolidation in the industry.