Application Of Panel Data Models In Benchmarking Analysis Of The Electricity Distribution Sector
AbstractThis paper explores the application of several panel data models in measuring productive efficiency of the electricity distribution sector. Stochastic Frontier Analysis has been used to estimate the cost-efficiency of 59 distribution utilities operating over a nine-year period in Switzerland. The estimated coefficients and inefficiency scores are compared across three different panel data models. The results indicate that individual efficiency estimates are sensitive to the econometric specification of unobserved firm-specific heterogeneity. This paper shows that alternative panel models such as the 'true' random effects model proposed by Greene (2005) could be used to explore the possible impacts of unobserved firm-specific factors on efficiency estimates. When these factors are specified as a separate stochastic term, the efficiency estimates are substantially higher suggesting that conventional models could confound efficiency differences with other unobserved variations among companies. On the other hand, refined specification of unobserved heterogeneity might lead to an underestimation of inefficiencies by mistaking potential persistent inefficiencies as external factors. Given that specification of inefficiency and heterogeneity relies on non-testable assumptions, there is no conclusive evidence in favour of one or the other specification. However, this paper argues that alternative panel data models along with conventional estimators can be used to obtain approximate lower and upper bounds for companies' efficiency scores. Copyright 2006 The Authors Journal compilation � CIRIEC 2006.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal Annals of Public and Cooperative Economics.
Volume (Year): 77 (2006)
Issue (Month): 3 (09)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1370-4788
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Farsi, Mehdi & Filippini, Massimo, 2009.
"An analysis of cost efficiency in Swiss multi-utilities,"
Elsevier, vol. 31(2), pages 306-315, March.
- Mehdi Farsi & Massimo Filippini, 2008. "An Analysis of Cost-Efficiency in Swiss Multi-utilities," CEPE Working paper series 08-60, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Emili GRIFELL-TATJ� & Kristiaan KERSTENS, 2008.
"Incentive Regulation And The Role Of Convexity In Benchmarking Electricity Distribution: Economists Versus Engineers,"
Annals of Public and Cooperative Economics,
Wiley Blackwell, vol. 79(2), pages 227-248, 06.
- Emili Grifell-Tatjé & Kristiaan Kerstens, 2007. "Incentive Regulation and the Role of Convexity in Benchmarking Electricity Distribution: Economists versus Engineers," Working Papers 2007-ECO-01, IESEG School of Management.
- Astrid Cullmann & Jürgen Apfelbeck & Christian von Hirschhausen, 2006.
"Efficiency Analysis of East European Electricity Distribution in Transition: Legacy of the Past?,"
Discussion Papers of DIW Berlin
553, DIW Berlin, German Institute for Economic Research.
- Astrid Cullmann & Christian Hirschhausen, 2008. "Efficiency analysis of East European electricity distribution in transition: legacy of the past?," Journal of Productivity Analysis, Springer, vol. 29(2), pages 155-167, April.
- Jamasb, T. & Söderberg, M., 2009. "Yardstick and Ex-post Regulation by Norm Model: Empirical Equivalence, Pricing Effect, and Performance in Sweeden," Cambridge Working Papers in Economics 0908, Faculty of Economics, University of Cambridge.
- Philippe K. Widmer, 2011. "Does prospective payment increase hospital (in)efficiency? Evidence from the Swiss hospital sector," ECON - Working Papers 053, Department of Economics - University of Zurich.
- Philippe K Widmer & Peter Zweifel & Mehdi Farsi, 2010.
"Accounting For Heterogeneity In The Measurement of Hospital Performance,"
Economics Discussion / Working Papers
10-21, The University of Western Australia, Department of Economics.
- Philippe K. Widmer & Peter Zweifel & Mehdi Farsi, 2011. "Accounting for heterogeneity in the measurement of hospital performance," ECON - Working Papers 052, Department of Economics - University of Zurich.
- Anne-Kathrin Last & Heike Wetzel, 2011.
"Baumol’s cost disease, efficiency, and productivity in the performing arts: an analysis of german public theaters,"
Journal of Cultural Economics,
Springer, vol. 35(3), pages 185-201, August.
- Anne-Kathrin Last & Heike Wetzel, 2010. "Baumol’s Cost-Disease, Efficiency, and Productivity in the Performing Arts: An Analysis of German Public Theaters," Working Paper Series in Economics 173, University of Lüneburg, Institute of Economics.
- Luisa Affuso & Alvaro Angeriz & Michael Pollitt, 2009. "The Impact of Privatisation on the Efficiency of Train Operation in Britain," Working Papers 28, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.