Demand for Inputs, Economies of Scale and Technical change in Iran’sElectricity Generation Industry during 1350-1386

Document Type : Research Paper

Authors

1 Faculty Member, FerdowsiUniversity of Mashhad

2 Master’s graduate in Economics from Ferdowsi University of Mashhad

Abstract

The main objectives of this research are the estimation of input demand equations and the investigation of economies of scale and technical change in Iran’s thermal power (electricity) generation industry during 1350-1386. Input demand equations are derived from a translog variable cost function using Shephard’s lemma. Data used in this study are for thermal electricity generation industry and they are of aggregate time series type. Estimation of input demand equations along with translog cost function is done with the method of Seemingly Unrelated Regressions (SUR). Results show the existence of a well-behaved translog cost function and economies of scale in Iran’s electricity generation industry. They also indicate the existence of bias in technical change over the stated time period. It is found that the rate of technical improvement was increasing in the earlier parts of the period and decreasing in the later parts of the same period. In addition, estimates of Allen-Uzawaelasticities of substitution, own- and cross price elasticities of demand, and Morishimaelasticities of substitution for inputs are presented in the article.

Keywords

References

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