Measuring the trade-off between dynamic and static efficiency in the respect of RD investment : the case of the electricitygenerating firms following electricity industry liberalization

摘要

After the worldwide liberalization of the electricity market, a warning on R&D disincentiveshas been raised. We propose a new empirical framework to analyze the impact of the marketrestructuring on firms’ static and dynamic efficiency of the industry. In this paper, we construct amodel which can observe dynamic efficiency change occurred by reduced R&D investment of theelectricity generation firms’ following the liberalization. The model has a ‘quasi two-stage’ setup. Inthe first stage, the firms make R&D investment decision. We endogenize firms’ R&D decisions,which impacts on the marginal costs in the long run with accumulation and spillover effects. In thesecond stage, firms follow price decision under market structure and the marginal cost conditionwhich is endogenized by accumulated R&D investment. We estimate this model for the 16 electricitygenerating firms in 3 countries (Korea, Japan and UK). The results suggest that the liberalizationpolicies could be harmful for dynamic efficiency in the respect of R&D investment.