Learning-by-doing and input demand of a rate-of-return regulated firm

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The significance of learning by doing to input demand of a cost-minimizing rate-of-return-regulated firm is examined. Using a panel data, the results indicate that the firm's cost and input demand decisions are both influenced by learning-by-doing. The firm's cost and the rate-base (capital) input requirements decline as learning-by-doing measured by cumulative production expands. However, LBD may have different effects on the non-rate-base inputs (labor and fuel) considered in this study. While LBD ambiguously reduces fuel usage, it moderately increases labor employment. In addition to changing input intensity, LBD also influences returns to scale and elasticity of substitution.

Original languageEnglish (US)
Pages (from-to)1015-1037
Number of pages23
JournalEconomic Modelling
Issue number6
StatePublished - Dec 2004

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics


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