Laurits R. Christensen

Transcendental Logarithmic Production Frontiers

Focuses on additive and homogeneous production possibility frontiers that have played an important role in formulating statistical tests of the theory of production. Characterization of the class of production possibility frontiers that are homogenous and additive; Representation of the production possibility frontier; Statistical tests of the theory of production. (Из Ebsco)

Economies of Scale in U.S. Electric Power Generation

We estimate economies of scale for U.S. firms producing electric power. Cross-section data for 1955 and 1970 are analyzed using the translog cost function. We find that in 1955 there were significant scale economies available to nearly all firms. By 1970, however, the bulk of U.S. electricity generation was by firms operating in the essentially flat area of the average cost curve. We conclude that a small number of extremely large firms are not required for efficient production and that policies designed to promote competition in electric power generation cannot be faulted in terms of sacrificing economies of scale.

Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs Differ

There has been a perception that U.S. trunk airlines had an inherent cost advantage over smaller regional airlines because of economies of scale. We have formulated a general model of airline costs, which we estimate by using panel data on large and small airlines. Differences in scale are shown to have no role in explaining higher costs for small airlines. The primary factor explaining cost differences is density of traffic within an airlines network. Also of major importance is the average length of individual flights.

The Relative Efficiency of Public and Private Firms in a Competitive Environment: The Case of Canadian Railroads

The efficiency of public and private firms is usually compared in industries which have heavy regulation and limited competition. In this paper we present a case study in which the effects of property rights can be isolated from the effects of regulation on noncompetitive markets. We compare the postwar productivity performance of the Canadian National and Canadian Pacific Railroads. Contrary to the predictions of the property rights literature, we find no evidence of inferior performance by the government-owned railroad. We conclude that any tendency toward inefficiency resulting from public ownership has been overcome by the benefits of competition.

The Internal Structure of Functional Relationships: Separability, Substitution, and Aggregation

The literature on functional relationships among economic variables has treated elasticities of substitution and functional separability as distinct ways of characterizing a functional relationship. Discussions of elasticities of substitution have primarily been related to comparative statics analyses of the derived demand for factors of production and changes in factor shares or the derived demand for commodities and changes in budget shares.3 On the other hand, discussions of the internal structure of functions have typically been concerned with whether a function of many arguments could be separated into subfunctions. If such separability is permissible, efficiency in production or consumption can be realized by sequential optimization. For example, in production decisions relative factor intensities can be optimized within each separable subset, and then optimal intensities can be attained by holding fixed the within-subset intensities and optimizing the betweensubset intensities.4 The purpose of this paper is to integrate the discussions of functional separability and elasticities of substitution. In the context of production theory we prove theorems which establish that separability restrictions on a function are equivalent to certain equality restrictions on the Allen partial elasticities of substitution. Since Leontief [14], [15] has related functional separability to the existence of sub-aggregate indexes, our theorems relate restrictions on the Allen partial elasticities of substitution to functional separability and the existence of sub-aggregate indexes.

Modelling the Structure of Cost and Production for Multiproduct Firms

Virtually all enterprises market a multiplicity of products; yet, most econometric models of production or cost presume a single homogeneous output. Moreover, models which do recognize multiple products typically specify transformation functions with severe a priori restrictions on the structure of production and cost. Recently McFadden [13; 14], Jacobsen [9], and Shephard [16] have used the principles of duality to demonstrate the existence of multiproduct cost functions corresponding to general production structures. This gives rise to the possibility of directly modelling the structure of cost for multiproduct firms without imposing arbitrary a priori restrictions on the structure of production. Two common restrictions on the structure of production are homogeneity and separability. In this paper we demonstrate that these restrictions can be relaxed by the use of a flexible multiproduct cost function. We illustrate the methodology with a data set which has been previously analyzed under restrictive specifications. The results indicate that the imposition of homogeneity and separability can greatly distort estimates of marginal costs and scale economics.

Productivity in U.S. Railroads, 1951-1974

This paper develops estimates of U.S. railroad productivity by using methods based on the neoclassical theory of production. We find that railroad productivity grew at the average annual rate of 1.5 percent per year during the 1951-1974 period. Using conventional measurement procedures for comparison, we find productivity growth of 3.6 percent per year. The lower estimate of 1.5 percent is the result of using procedures which better represent the railroad production process. These include using (1) estimated cost elasticities, rather than revenue shares, as output weights, (2) actual cost shares, rather than national income shares, as input weights, and (3) input and output weights which change annually.

Econometric analysis of residential time-of-use electricity pricing experiments

Abstract This paper adapts the two-stage neo-classical model of consumer behavior to the analysis of time-of-use pricing of electricity. Emphasis is placed upon the relationship between partial elasticities, which can be accurately estimated from the first stage, and total elasticities, which can be estimated only by using less reliable information to estimate the second stage. Three functional forms are implemented with data from the Wisconsin Pricing Experiment. Results indicate that (1) the CES and generalized Leontief functional forms are preferred, (2) price elasticities vary substantially with price, and (3) peak and off-peak electricity are partial substitutes but total complements.

Consistency of residential customer response in time-of-use electricity pricing experiments☆

Abstract Using data from five experimental implementations of residential TOU rates in the United States, we estimate a consumer demand model for each experiment, and test the hypothesis that the elasticities of substitution are identical across experiments. The model is derived from an indirect utility function that permits the modelling to be separated into three stages. At each stage the parameters depend upon appliance stocks, housing characteristics, and climate. We do not reject the hypothesis that the parameters determining the elasticities of substitution are identical across experiments. This yields a generally applicable model for predicting residential response to TOU rates.

Estimating U.S. consumer preferences for meat with a flexible utility function

Abstract Direct and indirect translog utility functions provide budget share equations which are both flexible and consistent with the theory of utility maximization. These forms are attractive for modelling consumer behavior. Because of their flexibility they are ideal for testing hypotheses such as additivity of preferences. In this paper we use the translog methodology to analyze U.S. consumption of the four principal categories of meat-fish, beef, poultry, and pork. We decisively reject the hypothesis of additivity. However, further testing for partial additivity reveals that (beef) and (fish, poultry, pork) are additively separable subgroups of meat.