L. Dean Hiebert

The Determinants of the Cost Efficiency of Electric Generating Plants: A Stochastic Frontier Approach

This article provides a detailed analysis of generation plant operating cost efficiency over the period 1988–1997. I estimate a stochastic frontier cost function together with a model of plant inefficiencies to measure the operating efficiencies of individual plants and identify factors that are associated with variations in plant efficiencies. I find evidence that plant efficiencies are associated with capacity utilization of the plant, the number of plants under utility management, and ownership form. I also find that regulatory restructuring activity in certain states is associated with improvements in plant operating performance.

The labor-managed firm under production uncertainty

Abstract This paper analyzes the input choices of the labor-managed firm facing production uncertainty. We provide conditions sufficient to determine the comparative static effects of increases in risk aversion and increases in the riskiness of production. The results depend critically on the stochastic specification of the firms production function. In particular, we show that a risk-averse producer may employ more labor than a risk-neutral producer, contrary to the result obtained in the previous literature.

The determinants of enrollment shares of institutions of higher education

This study examines the impact of academic quality, admissions selectivity, costs, the range of academic programs offered, and location of particular institutions on enrollment shares of these institutions. The findings clearly indicate that tuition and room and board costs, admissions selectivity, and the range of academic programs all strongly affect enrollments.

Ex Post Flexibility and Choice of Capacity for Loss Reduction

This paper examines the implications of ex post utilization flexibility for the firms ex ante choice of capacity to supply a loss-reducing input. It is shown that the optimal ex ante choice is greater in the presence of flexibility than in the absence of flexibility. It is also shown that the total effect of an increase in risk on the ex ante choice includes a flexibility effect when ex post flexibility is present. The flexibility effect always tends to increase the demand for capacity.

Producer Preference for Price Stability

Producer preference for product price variability vis-a-vis price stability at the mean is examined in a simple two-input model where one input is chosen after price is known while the other input must be chosen before price is observed. The result shows that risk-neutral producers may strictly prefer price stability.