Why Does Nuclear Power Performance Differ Across Europe?
Published in: European Economic Review, v. 39, no. 6, 1995, p. 1197-1214
Posted on RAND.org on January 01, 1995
This paper compares the performance of nuclear power plants in five European countries by estimating a microeconomic model of managerial decision making. The statistical formulation of production as a controlled stochastic process connects economic theory much more closely to actual production events than standard economic production functions. In this application, the structural behavioral model distinguishes variations in economic, regulatory, and cultural environments (different incentives for plant operations) from technical variations (different production functions). It also estimates the weights that management attaches to different aspects of performance, such as reliability (safety) and availability (productivity). While any structural model necessitates debatable assumptions, the approach nevertheless has much to contribute to public policy discussions. The results from 1981-1986 reveal that management attitudes towards the reliability/productivity trade-off differ substantially between European countries. This suggests that the incentives of plant managers differ in ways that may not have been intended or desirable.