A cost function for the natural gas transmission industry: further considerations

Massol, O. (2011). A cost function for the natural gas transmission industry: further considerations (Report No. 11/03). London, UK: Department of Economics, City University London.

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Abstract

This article studies the cost function for the natural gas transmission industry. In addition to a tribute to H.B. Chenery, it firstly offers some further comments on a recent contribution (Yépez, 2008): a statistical characterization of long-run scale economies, and a simple reformulation of the long-run problem. An extension is then proposed to analyze how the presence of seasonally-varying flows modifies the optimal design of a transmission infrastructure. Lastly, the case of a firm that anticipates a possible random rise in its future output is also studied to discuss the optimal degree of excess capacity to be built into a new transmission infrastructure.

Item Type: Monograph (Discussion Paper)
Additional Information: © 2011 Olivier Massol.
Uncontrolled Keywords: Engineering economics, natural gas transmission, infrastructure planning
Subjects: H Social Sciences > HB Economic Theory
Divisions: School of Social Sciences > Department of Economics > Department of Economics Discussion Paper Series
URI: http://openaccess.city.ac.uk/id/eprint/1464

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