A comparison of costs in privately owned and publicly owned electric utilities: The role of scale

The continued coexistence of small, publicly owned electricity utilities and larger privately owned utilities suggests that each ownership form has advantages inherent in scale and/or the acquisition of inputs. This pattern may be due to voters being better monitors in small jurisdictions, which yields more effective municipal cost control. This empirical study analyzes, using a translog cost function, the relative cost-efficiency of a relatively large sample of 121 privately owned and 61 publicly owned firms generating electricity via fossil fuels. publicly owned firms; are indeed more efficient at low output levels. Ownership choices are consistent with cost minimization.