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Firm growth in the Swedish energy sector: Will large firms become even more dominant?
Dalarna University, Falun, Sweden.ORCID iD: 0000-0001-7193-2989
HUI Research, Stockholm, Sweden; Dalarna University, Falun, Sweden.
Dalarna University, Falun, Sweden.ORCID iD: 0000-0003-3724-2399
2014 (English)In: International Journal of Energy and Statistics, ISSN 2335-6804, Vol. 2, no 4, p. 247-267Article in journal (Refereed) Published
Abstract [en]

This paper examines the determinants of firm growth in the Swedish energy sector using a sample of 200 energy firms active from 2000 to 2010. The article has two aims. First, we seek to investigate whether there is reason to believe that the Swedish energy market will become more concentrated in the future, dominated by a few firms. That would be the result if, for example, large firms systematically and over time grew faster than the smaller firms in the Swedish market. Second, we investigate whether firm growth can mainly be explained by firm-specific variables, supporting Penrose's [1] suggestion that internal resources are the key determinants of firm growth rates. To this end, quantile regression is used in addition to ordinary least squares regression, to provide a more complete estimation of the growth distribution of firms conditional on different attributes. The results indicate that large firms do not grow faster than other firms in the sector, and that energy firms' internal resources are indeed the key determinants of firm growth in the Swedish energy industry.

Place, publisher, year, edition, pages
World Scientific, 2014. Vol. 2, no 4, p. 247-267
Keywords [en]
Market power, energy market regulation, energy market competetion, quantile regresssion, competetion policy
National Category
Economics
Identifiers
URN: urn:nbn:se:oru:diva-62322DOI: 10.1142/S2335680414500173OAI: oai:DiVA.org:oru-62322DiVA, id: diva2:1156381
Available from: 2015-12-18 Created: 2017-11-13 Last updated: 2018-04-25Bibliographically approved
In thesis
1. Firm dynamics and competition in the electricity market
Open this publication in new window or tab >>Firm dynamics and competition in the electricity market
2018 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis consists of four independent essays that deal with the firm dynamics and competition in the electricity market. Specifically, it addresses two important facets of firm dynamics, namely, firm performance (growth and profitability) and the change in competition intensity that Swedish electricity firms face, brought by the process of deregulation in Swedish electricity market.

Essay 1 investigates whether Gibrat’s law holds for individual firms. The results support the claim that Gibrat’s law is more likely to be rejected ex ante when an entire firm population is considered, but more likely to be confirmed ex post after market selection has “cleaned” the original population of firms or when the analysis treats more disaggregated data.

Essay 2 examines the determinants of firm growth in the Swedish electricity sector. The results indicate that large firms do not grow faster than do other firms in the sector, and that electricity firms’ internal resources are indeed the key determinants of firm growth in the Swedish electricity industry.

Essay 3 shows that although multi-plant firms are more prevalent than single-plants firms in industries characterized by scale economies and imperfect competition, multi-plant electricity firms on average have a one percentage-point lower return on total asset than their single-plant counterparts as they reach a ‘steady state’ firm size when an optimal size is identified. The potential reasons could be loss of control across hierarchical levels within multi-plant firms or the adaption to technological changes lag behind in comparison to single–plant firms.

Essay 4 compare competition intensity before and after the launch of Internet electricity price comparison sites (IEPCS). The heterogeneous effects on competition intensity are found, with the largest effect on competition found in parts of the market that were already characterized by high levels of competition before the launch of IEPCS.

Place, publisher, year, edition, pages
Örebro: Örebro University, 2018. p. 24
Series
Örebro Studies in Economics, ISSN 1651-8896 ; 39
Keywords
Firm growth, profitability, steady-state, market power, competition, Boone indicator
National Category
Economics
Identifiers
urn:nbn:se:oru:diva-66033 (URN)978-91-7529-244-1 (ISBN)
Public defence
2018-05-25, Örebro universitet, Hörsalen, Musikhögskolan, Fakultetsgatan 1, Örebro, 13:00 (English)
Opponent
Supervisors
Available from: 2018-03-23 Created: 2018-03-23 Last updated: 2018-04-27Bibliographically approved

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