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Efficiency analysis for Peruvian electricity distribution sector : inefficiency’s explicative factors. A study for 2000-2008

Author

Listed:
  • José Luis Bonifaz

    (Universidad del Pacífico)

  • Miguel A. Jaramillo

    (SBS)

Abstract

This paper estimates the inefficiency of Peruvian electricity distribution companies to determine if the expected results from the 90’s reform were met. To do this, we used data for 19 distribution companies for the period 2000 – 2008 using a Cost Stochastic Frontier approach and estimating inefficiency in a one-step procedure. The analysis suggests that private utilities are less inefficient than public Utilities because of better management practices. In other words, private management and investments had been favorable in terms of efficiency for the period studied. Also, regulation changes, especially in 2005, have increased distribution costs and geographical characteristics impact negatively on efficiency, especially in public Utilities. This can be explained by the fact that State investment in difficult areas, with public Utilities operating, imposes additional costs (management and operational) that makes them inefficient. Future investigations should focus in a Region Analysis, for the sake of a bigger Panel sample.

Suggested Citation

  • José Luis Bonifaz & Miguel A. Jaramillo, 2010. "Efficiency analysis for Peruvian electricity distribution sector : inefficiency’s explicative factors. A study for 2000-2008," Working Papers 10-04, Centro de Investigación, Universidad del Pacífico.
    • Handle: RePEc:pai:wpaper:10-04
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    References listed on IDEAS

    as
    1. Gian Carlo Scarsi, 1999. "Local Electricity Distribution in Italy: Comparative Efficiency Analysis and Methodological Cross-Checking," Working Papers 1999.16, Fondazione Eni Enrico Mattei.
    2. Reifschneider, David & Stevenson, Rodney, 1991. "Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 715-723, August.
    3. Bagdadioglu, Necmiddin & Waddams Price, Catherine M. & Weyman-Jones, Thomas G., 1996. "Efficiency and ownership in electricity distribution: A non-parametric model of the Turkish experience," Energy Economics, Elsevier, vol. 18(1-2), pages 1-23, April.
    4. Kodde, David A & Palm, Franz C, 1986. "Wald Criteria for Jointly Testing Equality and Inequality Restriction s," Econometrica, Econometric Society, vol. 54(5), pages 1243-1248, September.
    5. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Distribution sector; utilities; inefficiency; ranking stochastic frontier; reform;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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