In a cross-sectional study of U.S. electric utility companies, Christensen and
Greene used a logarithmic model to test for the presence of economies and diseconomies
of scale. The long-run average cost curve (LRAC) using data on 114
firms is shown in Figure 9.2. The bar below the graph indicates the number of
firms in each interval. Below 19.8 billion kWh (left arrow in graph), significant
economies of scale were found to exist. The 97 firms in this range accounted for
48.7 percent of the total output. Between 19.8 and 67.1 billion kWh (right arrow
in the graph), no significant economies of scale were present. The 16 firms in
this range accounted for 44.6 percent of the total output. Above 67.1 billion
kWh, diseconomies of scale (one firm and 6.7 percent of total output) were
found.