The Impact of Rate-of-Return Regulation on Technological Innovation

Cover -- Half Title -- Dedication -- Title -- Copyright -- Contents -- List of Tables -- List of Figures -- Acknowledgements -- Introduction -- The Research Question -- Outline -- 1 Rate-of-Retum Regulation -- 1.1 Rate-of-Retum Regulation in the Gas, Telephone, and Electric Industries -- 1.2 The Historical Development of Rate Regulation -- 1.3 Rate-of-Retum Regulation in Action -- 1.3.1 Revenue Requirement Phase -- 1.3.2 Rate Design Phase -- 2 The Averch-Johnson Model -- 2.1 The Averch-Johnson Effect -- 2.2 A Geometric Treatment -- 2.3 Extensions of the Averch-Johnson Model -- 2.3.1 Regulation Lags -- 2.3.2 Non-Profit Maximization -- 2.3.3 The Cost of Capital and the Allowed Rate-of-Retum -- 2.3.4 Induced Technical Change -- 3 Augmented Averch-Johnson -- 3.1 Augmented Averch-Johnson -- 3.2 Extension on Factor Augmentation with R&D Spillovers -- Appendix: Note on Neoclassical and Endogenous Technology -- A.3.1 Neoclassical Production Functions with Technology -- A.3.2 Endogenous Growth Production Functions -- 4 Research Joint Ventures -- 4.1 Noncooperative R&D and Output -- 4.2 Cooperative R&D and Noncooperative Output -- 4.3 Cooperative R&D and Output -- 4.4 Discussion -- 5 Evidence From Electric Utilities in Texas -- 5.1 Translog Cost Model -- 5.2 The Data -- 5.3 Estimation and Results -- 5.4 Summary -- Appendix: Pooled Model -- 6 Implications and Conclusions -- 6.1 Welfare Implications -- 6.2 Next Step -- Bibliography -- Index