| Abstract: | Theory predicts that the combined capacity of two competing utility firms will be greater than the market requires and excess capacity will result. This study tested a set of monopoly and a set of duopoly electric utility firms and found that the outcome predicted by theory did not occur. Even though the duopoly firms did face more downward pressure on capacity utilization than the monopoly firms, the difference was not statistically significant. These results reveal that public policy decisions, predicated upon assumptions that combined capacity of two competing electric firms would be greater than the market requires, should be re-examined. |
