Regulation, Ownership Form, And The Economic Efficiency Of Rural Electric Distribution Cooperatives

This paper uses a translog profit function to analyze economic efficiency in rural electric distribution cooperatives for the period 1974-1982. Hypotheses dealing with absolute price efficiency, the effect of capital on profit and the effect of service area density on profit are tested. The paper uses a translog profit function analysis with both fixed and variable inputs to test the various hypotheses. Regulatory intensity variables are developed and used to examine the effect of regulation on technical efficiency. The results indicate that cooperatives are not profit maximizers, regulation has a negligible effect on technical efficiency, capital positively affects profit, and increasing service area density positively affects profit.