Efficiency analysis of German electricity distribution utilities - non-parametric and parametric tests
AbstractThis study applies non-parametric and parametric tests to assess the efficiency of electricity distribution companies in Germany. Traditional issues in electricity sector benchmarking are addressed, such as the role of scale effects and optimal utility size, as well as new evidence specific to the situation in Germany. Labour, capital, and peak load capacity are used as inputs, and units sold and the number of customers as output. The data cover 307 (out of 553) German electricity distribution utilities. A data envelopment analysis (DEA) is applied with constant returns to scale (CRS) as the main productivity analysis technique, whereas stochastic frontier analysis (SFA) with distance function is the verification method. The results suggest that returns to scale play but a minor role; only very small utilities have a significant cost advantage. Low customer density is found to affect the efficiency score significantly, in particular in the lower third of all observations. Surprisingly, East German utilities feature a higher average efficiency than their West German counterparts. The correlation tests imply a high coherence of the results.
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 Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 38 (2006)
Issue (Month): 21 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RAEC20
Other versions of this item:
- von Hirschhausen, Christian R. & Cullmann, Astrid, 2005. "Efficiency Analysis of German Electricity Distribution Utilities : Non-Parametric and Parametric Tests," Dresden Discussion Paper Series in Economics 06/05, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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.:
- Massimo Filippini & Jörg Wild, 2000.
"Regional Differences in Electricity Distribution Costs and their Consequences for Yardstick Regulation of Access Prices,"
CEPE Working paper series
00-05, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Filippini, Massimo & Wild, Jorg, 2001. "Regional differences in electricity distribution costs and their consequences for yardstick regulation of access prices," Energy Economics, Elsevier, vol. 23(4), pages 477-488, July.
- Grosskopf, S. & Margaritis, D. & Valdmanis, V., 1995. "Estimating output substitutability of hospital services: A distance function approach," European Journal of Operational Research, Elsevier, vol. 80(3), pages 575-587, February.
- Antonio Estache & Martin Rossi & Christian Ruzzier, 2004.
"The case for international coordination of electricity regulation: evidence from the measurement of efficiency in South America?,"
ULB Institutional Repository
2013/13372, ULB -- Universite Libre de Bruxelles.
- Antonio Estache & MartÌn A. Rossi & Christian A. Ruzzier, 2004. "The Case for International Coordination of Electricity Regulation: Evidence from the Measurement of Efficiency in South America," Journal of Regulatory Economics, Springer, vol. 25(3), pages 271-295, 05.
- Estache, Antonio & Rossi, Martin A. & Ruzzier, Christian A., 2002. "The case for international coordination of electricity regulation : evidence from the measurement of efficiency in South America," Policy Research Working Paper Series 2907, The World Bank.
- Antonio Estache & Martin Rossi & Christian Ruzzier, 2004. "The Case for International Coordination of Electricity Regulation: Evidence from the Measurement of Efficiency in South America," ULB Institutional Repository 2013/43975, ULB -- Universite Libre de Bruxelles.
- Mehdi Farsi & Massimo Filippini, 2003.
"Regulation and Measuring Cost Efficiency with Panel Data Models: Application to Electricity Distribution Utilities,"
CEPE Working paper series
03-19, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Mehdi Farsi & Massimo Filippini, 2004. "Regulation and Measuring Cost-Efficiency with Panel Data Models: Application to Electricity Distribution Utilities," Review of Industrial Organization, Springer, vol. 25(1), pages 1-19, 08.
- Hjalmarsson, Lennart & Veiderpass, Ann, 1992. " Productivity in Swedish Electricity Retail Distribution," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S193-205, Supplemen.
- Coelli, Tim & Perelman, Sergio, 1999. "A comparison of parametric and non-parametric distance functions: With application to European railways," European Journal of Operational Research, Elsevier, vol. 117(2), pages 326-339, September.
- Jamasb, T. & Pollitt, M., 2001. "International Benchmarking and Yardstick Regulation: An Application to European Electricity Utilities," Cambridge Working Papers in Economics 0115, Faculty of Economics, University of Cambridge.
- Kostas Tsekouras & Dimitris Skuras, 2005. "Productive efficiency and exports: an examination of alternative hypotheses for the Greek cement industry," Applied Economics, Taylor & Francis Journals, vol. 37(3), pages 279-291.
- Alejandra Mizala & Pilar Romaguera & Dario Farren, 2002. "The technical efficiency of schools in Chile," Applied Economics, Taylor & Francis Journals, vol. 34(12), pages 1533-1552.
- Growitsch, Christian & Wein, Thomas, 2005. "Network access charges, vertical integration, and property rights structure--experiences from the German electricity markets," Energy Economics, Elsevier, vol. 27(2), pages 257-278, March.
- Giannakis, D. & T. Jamasb & Pollitt, M.G., 2004. "Benchmarking and incentive regulation of quality of service: an application to the UK electricity distribution utilities," Cambridge Working Papers in Economics 0408, Faculty of Economics, University of Cambridge.
- David Hauner, 2005.
"Explaining efficiency differences among large German and Austrian banks,"
Taylor & Francis Journals, vol. 37(9), pages 969-980.
- David Hauner, 2004. "Explaining Efficiency Differences Among Large German and Austrian Banks," IMF Working Papers 04/140, International Monetary Fund.
- Mork, Knut Anton, 1992. " Productivity in Swedish Electricity Retail Distribution: Comment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S207-09, Supplemen.
- Rolf Fare & Shawna Grosskopf & William Weber, 2004. "The effect of risk-based capital requirements on profit efficiency in banking," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1731-1743.
- Laure Latruffe & Kelvin Balcombe & Sophia Davidova & Katarzyna Zawalinska, 2004. "Determinants of technical efficiency of crop and livestock farms in Poland," Applied Economics, Taylor & Francis Journals, vol. 36(12), pages 1255-1263.
- Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
- Burns, Philip & Weyman-Jones, Thomas G, 1996. "Cost Functions and Cost Efficiency in Electricity Distribution: A Stochastic Frontier Approach," Bulletin of Economic Research, Wiley Blackwell, vol. 48(1), pages 41-64, January.
- 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.
- 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.
- Lenka Šastná & Martin Gregor, 2011. "Local Government Efficiency: Evidence from the Czech Municipalities," Working Papers IES 2011/14, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised May 2011.
- Peter Bönisch & Peter Haug & A. Illy & L. Schreier, 2011. "Municipality Size and Efficiency of Local Public Services: Does Size Matter?," IWH Discussion Papers 18, Halle Institute for Economic Research.
- 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.
- Astrid Cullmann & Hélène Crespo & Marie-Anne Plagnet, 2008. "International Benchmarking in Electricity Distribution: A Comparison of French and German Utilities," Discussion Papers of DIW Berlin 830, DIW Berlin, German Institute for Economic Research.
- Kuosmanen, Timo, 2012. "Stochastic semi-nonparametric frontier estimation of electricity distribution networks: Application of the StoNED method in the Finnish regulatory model," Energy Economics, Elsevier, vol. 34(6), pages 2189-2199.
- Tooraj Jamasb & Magnus Söderberg, 2010. "The Effects of Average Norm Model Regulation: The Case of Electricity Distribution in Sweden," Review of Industrial Organization, Springer, vol. 36(3), pages 249-269, May.
- Astrid Cullmann & Christian von Hirschhausen, 2007. "From Transition to Competition: Dynamic Efficiency Analysis of Polish Electricity Distribution Companies," Discussion Papers of DIW Berlin 716, DIW Berlin, German Institute for Economic Research.
- Taniguchi, Mariko & Kaneko, Shinji, 2009. "Operational performance of the Bangladesh rural electrification program and its determinants with a focus on political interference," Energy Policy, Elsevier, vol. 37(6), pages 2433-2439, June.
- Geys, Benny & Moesen, Wim, 2008. "Measuring local government technical (in)efficiency: An application and comparison of FDH, DEA and econometric approaches," Discussion Papers, Research Unit: Market Processes and Governance 2008-21, Social Science Research Center Berlin (WZB).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.