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Productivity and Efficiency of US Gas Transmission Companies: A European Regulatory Perspective

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Author Info
Jamasb, T.
Pollitt, M.G.
Triebs, T.

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Abstract

On both sides of the Atlantic the regulation of gas transmission networks has undergone major changes since the early 1990’s. Whereas in the US the long-standing regime of cost-plus regulation was complemented by increasing pipe-to-pipe competition, most European countries moved towards incentive regulation complemented by market integration. We study the impact of US regulatory reform using a Malmquist-based productivity analysis for a panel of US interstate companies. Results are presented for changes in productivity, as well as for several convergence tests. The results indicate that taking productivity and convergence as performance indicators, regulation has been rather successful, in particular during a period where overall demand was flat. Lessons for European regulators are twofold. First, the US analysis shows that benchmarking of European transmission operators would be possible if data were available. Second, our results suggest that, in the long-run, market integration and competition are alternatives to the current European model.

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Publisher Info
Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0812.

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Length: 24
Date of creation: Mar 2008
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Handle: RePEc:cam:camdae:0812

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Related research
Keywords: Natural gas transmission; utility regulation; data envelopment analysis; total factor productivity; convergence;

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Find related papers by JEL classification:
L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity

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References listed on IDEAS
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.:
  1. 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. [Downloadable!]
  2. 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. [Downloadable!] (restricted)
  3. Carrington, Roger & Coelli, Tim & Groom, Eric, 2002. "International Benchmarking for Monopoly Price Regulation: The Case of Australian Gas Distribution," Journal of Regulatory Economics, Springer, vol. 21(2), pages 191-216, March. [Downloadable!] (restricted)
  4. Christian von Hirschhausen, 2006. "Infrastructure Investments and Resource Adequacy in the Restructured US Natural Gas Market – Is Supply Security at Risk?," Working Papers 0618, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research. [Downloadable!]
  5. Alam, Ila M Semenick & Sickles, Robin C, 2000. "Time Series Analysis of Deregulatory Dynamics and Technical Efficiency: The Case of the U.S. Airline Industry," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 203-18, February.
  6. Paul L. Joskow, 1972. "The Determination of the Allowed Rate of Return in a Formal Regulatory Hearing," Bell Journal of Economics, The RAND Corporation, vol. 3(2), pages 632-644, Autumn. [Downloadable!] (restricted)
  7. Aivazian, Varouj A, et al, 1987. "Economies of Scale versus Technological Change in the Natural Gas Transmission Industry," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 556-61, August. [Downloadable!] (restricted)
  8. Alger, Dan & Toman, Michael A, 1990. "Market-Based Regulation of Natural Gas Pipelines," Journal of Regulatory Economics, Springer, vol. 2(3), pages 263-80, September.
  9. Rolf Färe & Shawna Grosskopf & Dimitri Margaritis, 2006. "Productivity Growth and Convergence in the European Union," Journal of Productivity Analysis, Springer, vol. 25(1), pages 111-141, 04. [Downloadable!] (restricted)
  10. Jamasb, Tooraj & Pollitt, Michael, 2003. "International benchmarking and regulation: an application to European electricity distribution utilities," Energy Policy, Elsevier, vol. 31(15), pages 1609-1622, December. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Steven Brakman & Charles van Marrewijk & Arjen van Witteloostuijn, 2009. "Market Liberalization in the European Natural Gas Market - The Importance of Capacity Constraints and Efficiency Differences," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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