| This dissertation examines the evolution and impact of market structure, ownership, and regulation in the U.S. electric power industry during the period 1882-1942. Chapter I analyzes the emergence of electric utility holding companies, public ownership, state rate of return regulation, and competition from 1882-1930 as responses to market imperfections in the electric power industry, including imperfect information, externalities, and scale economies. Testable hypotheses are developed with respect to the impact of these private and public responses to market failure on costs and monopoly rents in the U.S. electric power industry.;Chapter II analyzes the effects of federal New Deal legislation on the electric power industry. In light of these reforms, hypotheses corresponding to those in Chapter I are formed with respect to the industry at the close of the New Deal.;A non-linear simultaneous equations econometric model is developed in Chapter III of the thesis to analyze the rates charged for electric service, both in terms of costs and monopoly rents. The constituent price and demand equations incorporate data at the level of the firm and its service area.;The empirical section, Chapter IV, tests the hypotheses of the thesis using data on electric utilities serving cities of population 50,000 or more in the years 1930 and 1942. In neither year does state rate of return regulation or holding company affiliation appear to affect the magnitude of costs and monopoly rents associated with electric power companies. In both years public ownership appears to reduce electric rates significantly, although the effect appears to be stronger in 1930 than in 1942. Since differences in the cost of capital only explain a portion of the price differential, it is inferred that the absence of monopoly rents accounts for the remainder of the discount. Finally, firms subject to competition appear to charge lower prices than monopoly firms in 1930, in spite of higher costs. This price differential appears to have vanished by 1942, however, as a result of the rent-dissipating pressures of New Deal reforms that acted as proxies for competition even in monopoly markets. |
