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Measuring Cost Efficiency in the Brazilian Electricity Distribution Sector

Author

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  • Wagner Montoro Júnior

    (IBMEC Rio de Janeiro)

  • Arilton Teixeira

    (FUCAPE - Capixaba Foundation for Research in Accounting, Economy and Finance)

Abstract

The objective of the this work is to verify the applicability of parametric methods that measure the cost efficiency of Brazilian electricity distributors. We estimate total cost functions, derived from a Cobb-Douglas production function. The frontier cost model is estimated using GLS (Variance Components – Random Effects) and pooled least square (Fixed Effects) methods. We apply these methods to a sample of 25 Brazilian power distribution companies over a period of 12 years, from 1990 through 2001. The results indicate that in the period studied all the companies were equally efficient in controlling their costs.

Suggested Citation

  • Wagner Montoro Júnior & Arilton Teixeira, 2004. "Measuring Cost Efficiency in the Brazilian Electricity Distribution Sector," Brazilian Business Review, Fucape Business School, vol. 1(1), pages 63-73, January.
    • Handle: RePEc:bbz:fcpbbr:v:1:y:2004:i:1:p:63-73
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    References listed on IDEAS

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    1. 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, May.
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    3. Mehdi Farsi & Massimo Filippini, 2004. "Regulation and Measuring Cost-Efficiency with Panel Data Models: Application to Electricity Distribution Utilities," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 25(1), pages 1-19, August.
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    6. Tooraj Jamasb, 2002. "Reform and regulation of the electricity sectors in developing countries," Working Papers EP08, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    7. Mota, R.L., 2003. "The Restructuring and Privatisation of Electricity Distribution and Supply Business in Brazil: A Social Cost-Benefit Analysis," Cambridge Working Papers in Economics 0309, Faculty of Economics, University of Cambridge.
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