Table 5. Factor level settings with low (-), default, and high (+) factor settings. Note: Cost savings; †† Cost savings support range around standard production costs. IBC stands for interest on borrowed capital, IEC stands for interest on equity capital, MA stands for cost savings due to managerial ability, POL stands for the policy scenario, and TC stands for technological change.

Factor Description (-) default (+)
1 TC Technological change
Large-scale investments 0% 1.5% 2%
Medium-scale investments 0% 1.25% 1.5%
Small-scale investments 0% 1% 1%
2 MA Heterogeneity in managerial ability†† 0% ± 5% ± 10%
3 IBC Interest on long-term borrowed capital 3.5% 5.5% 7.5%
Interest on short-term borrowed capital 6% 8% 10%
4 POL Policy environment Agenda 2000 Agenda 2000 REGPREM
5 IEC Interest on equity capital 2% 4% 6%