Economies of Scale Versus Technological Change in the Natural Gas Transmission Industry

Although most productivity studies to date assume away scale economies, those studies which both incorporate scale economies and provide a relevant breakdown find that scale economies dominate technological change as a primary determinant of productivity growth. This paper measures the determinants...

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Bibliographic Details
Published in:The review of economics and statistics 1987-08, Vol.69 (3), p.556-561
Main Authors: Aivazian, Varouj A., Callen, Jeffrey L., M. W. Luke Chan, Mountain, Dean C.
Format: Article
Language:English
Subjects:
Air compressors
Econometrics
Economic models
Economic theory
Economies of scale
Growth rate
Industrial gases
Industrial productivity
Mathematical models
Natural gas
Natural gas industry
Natural gas pipelines
Productivity
Productivity growth
Technological change
Technology
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Summary:Although most productivity studies to date assume away scale economies, those studies which both incorporate scale economies and provide a relevant breakdown find that scale economies dominate technological change as a primary determinant of productivity growth. This paper measures the determinants of productivity growth in the U.S. Natural Gas Transmission industry. The technology was estimated using a translog approximation. Results of the econometric model were then utilized to measure the determinants of productivity growth in this industry. It was found that technological change explained certainly as much and often more of productivity growth as did scale economies.
ISSN:0034-6535
1530-9142
DOI:10.2307/1925549