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Incentive Regulation and the Role of Convexity in Benchmarking Electricity Distribution: Economists versus Engineers

Author

Listed:
  • Emili Grifell-Tatjé

    (Universitat Autònoma de Barcelona, Spain)

  • Kristiaan Kerstens

    (CNRS-LEM, IESEG School of Management)

Abstract

This note illustrates the potential impact of the specification of a convex production technology on establishing minimal costs compared to the use of a non-convex technology when benchmarking electricity distributors. This methodological reflection is mainly motivated by recent engineering literature providing evidence for non-convexities in electricity distribution. An empirical illustration using non-parametric specifications of technology illustrates this main point using a sample of Spanish electricity distribution firms earlier analysed in Grifell-Tatjé and Lovell (2003).

Suggested Citation

  • 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.
    • Handle: RePEc:ies:wpaper:e200701
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    Cited by:

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    2. Arnaud Abad & Paola Ravelojaona, 2020. "A Generalization of Environmental Productivity Analysis," Working Papers hal-02964799, HAL.
    3. Arnaud Abad & Paola Ravelojaona, 2021. "Pollution‐adjusted productivity analysis: The use of Malmquist and Luenberger productivity measures," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(3), pages 635-648, April.
    4. Arnaud Abad & Paola Ravelojaona, 2022. "A generalization of environmental productivity analysis," Post-Print hal-03592375, HAL.
    5. Tomas Balezentis & Kristiaan Kerstens & Zhiyang Shen, 2022. "Economic and Environmental Decomposition of Luenberger-Hicks-Moorsteen Total Factor Productivity Indicator: Empirical Analysis of Chinese Textile Firms With a Focus on Reporting Infeasibilities and Qu," Post-Print hal-03833245, HAL.
    6. Thijs Jong & Edwin Woerdman, 2016. "European Energy Regulators," Competition and Regulation in Network Industries, , vol. 17(1), pages 2-31, March.
    7. Giovanni Cesaroni & Kristiaan Kerstens & Ignace Van de Woestyne, 2017. "Estimating scale economies in non-convex production models," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(11), pages 1442-1451, November.
    8. An, Qingxian & Tao, Xiangyang & Chen, Xiaohong, 2023. "Nested frontier-based best practice regulation under asymmetric information in a principal–agent framework," European Journal of Operational Research, Elsevier, vol. 306(1), pages 269-285.
    9. Delnava, Haleh & Khosravi, Ali & El Haj Assad, Mamdouh, 2023. "Metafrontier frameworks for estimating solar power efficiency in the United States using stochastic nonparametric envelopment of data (StoNED)," Renewable Energy, Elsevier, vol. 213(C), pages 195-204.
    10. Víctor Giménez & Claudio Thieme & Diego Prior & Emili Tortosa-Ausina, 2017. "An international comparison of educational systems: a temporal analysis in presence of bad outputs," Journal of Productivity Analysis, Springer, vol. 47(1), pages 83-101, February.

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    More about this item

    Keywords

    Convexity; incentive regulation; benchmarking; engineering;
    All these keywords.

    JEL classification:

    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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