A multi-division efficiency evaluation of U.S. electric power companies using a weighted slacks-based measure
AbstractPrior to the 1990s, the electric power industry was highly regulated across the world. Under a liberalization policy to open markets and to grow competition commenced in the early 1990s, efficient management has become a necessity for companies in this industry. The current study examines the divisional efficiencies of multi-functional, vertically integrated companies seeking to optimize their overall management efficiency. For this purpose, divisional cost data are used as input into a slacks-based measure (SBM) model. This provides divisional efficiency indices based on slacks, as well as one for the larger firm-level management function. Further, given the important role of cost structure, we introduce a modified SBM, named the weighted SBM (WSBM), which directly incorporates division-specific weights into the objective function. Results reveal that the power generation divisions of the companies studied have significant influence on the overall cost, whereas the impact of the other four divisions - transmission, distribution, sales and general administrative - is limited.
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.
Bibliographic InfoArticle provided by Elsevier in its journal Socio-Economic Planning Sciences.
Volume (Year): 43 (2009)
Issue (Month): 3 (September)
Contact details of provider:
Web page: http://www.elsevier.com/locate/seps
Weighted slacks-based measure Divisional efficiency Vertical integration Electric power company;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Morita, Hiroshi & Hirokawa, Koichiro & Zhu, Joe, 2005. "A slack-based measure of efficiency in context-dependent data envelopment analysis," Omega, Elsevier, vol. 33(4), pages 357-362, August.
- Hjalmarsson, Lennart & Veiderpass, Ann, 1992. " Productivity in Swedish Electricity Retail Distribution," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S193-205, Supplemen.
- רמסיס גרא וברנדה מורגנשטיין, 2000. "מקבלי גמלת סיעוד 1999," Working Papers 520, National Insurance Institute of Israel.
- Drake, Leigh & Hall, Maximilian J.B. & Simper, Richard, 2006.
"The impact of macroeconomic and regulatory factors on bank efficiency: A non-parametric analysis of Hong Kong's banking system,"
Journal of Banking & Finance,
Elsevier, vol. 30(5), pages 1443-1466, May.
- Leigh M. Drake & Maximilian J. B. Hall & Richard Simper, 2005. "The Impact of Macroeconomic and Regulatory Factors on Bank Efficiency: A Non-Parametric Analysis of Hong Kong's Banking System," Working Papers 012005, Hong Kong Institute for Monetary Research.
- Hemphill Ross C. & Meitzen Mark E. & Schoech Philip E., 2003. "Incentive Regulation in Network Industries: Experience and Prospects in the U.S. Telecommunications, Electricity, and Natural Gas Industries," Review of Network Economics, De Gruyter, vol. 2(4), pages 1-22, December.
- H. Fried & C. Lovell & S. Schmidt & S. Yaisawarng, 2002. "Accounting for Environmental Effects and Statistical Noise in Data Envelopment Analysis," Journal of Productivity Analysis, Springer, vol. 17(1), pages 157-174, January.
- Ruggiero, John & Bretschneider, Stuart, 1998. "The weighted Russell measure of technical efficiency," European Journal of Operational Research, Elsevier, vol. 108(2), pages 438-451, July.
- Førsund, Finn R. & Kittelsen, Sverre A. C., 1998. "Productivity development of Norwegian electricity distribution utilities," Resource and Energy Economics, Elsevier, vol. 20(3), pages 207-224, September.
- Tone, Kaoru, 2001. "A slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 130(3), pages 498-509, May.
- Goto, Mika & Tsutsui, Miki, 1998. "Comparison of Productive and Cost Efficiencies Among Japanese and US Electric Utilities," Omega, Elsevier, vol. 26(2), pages 177-194, April.
- אסתר טולידנו, 2000. "מקבלי דמי אבטלה בשנת 1999," Working Papers 505, National Insurance Institute of Israel.
- Battese, George E. & Corra, Greg S., 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(03), December.
- Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
- Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June.
- Pastor, J. T. & Ruiz, J. L. & Sirvent, I., 1999. "An enhanced DEA Russell graph efficiency measure," European Journal of Operational Research, Elsevier, vol. 115(3), pages 596-607, June.
- Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
- דר מירי לוין רוזליס & רפי יודלביץ, 2000. "קבוצות לילדי נגמלים מסמים," Working Papers 156, National Insurance Institute of Israel.
- George E. Battese & Greg S. Corra, 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 169-179, December.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- Lin, Tzu-Yu & Chiu, Sheng-Hsiung, 2013. "Using independent component analysis and network DEA to improve bank performance evaluation," Economic Modelling, Elsevier, vol. 32(C), pages 608-616.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.