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Incentive Regulation And The Role Of Convexity In Benchmarking Electricity Distribution: Economists Versus Engineers

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  • Emili GRIFELL‐TATJÉ
  • Kristiaan KERSTENS

Abstract

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, 2008. "Incentive Regulation And The Role Of Convexity In Benchmarking Electricity Distribution: Economists Versus Engineers," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 79(2), pages 227-248, June.
    • Handle: RePEc:bla:annpce:v:79:y:2008:i:2:p:227-248
    DOI: 10.1111/j.1467-8292.2008.00364.x
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    2. 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.
    3. 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.
    4. Kristiaan Kerstens & Ignace Van de Woestyne, 2021. "Cost functions are nonconvex in the outputs when the technology is nonconvex: convexification is not harmless," Annals of Operations Research, Springer, vol. 305(1), pages 81-106, October.
    5. Arnaud Abad & Paola Ravelojaona, 2020. "A Generalization of Environmental Productivity Analysis," Working Papers hal-02964799, HAL.
    6. 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.
    7. Arnaud Abad & Paola Ravelojaona, 2022. "A generalization of environmental productivity analysis," Post-Print hal-03592375, HAL.
    8. 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.
    9. Thijs Jong & Edwin Woerdman, 2016. "European Energy Regulators," Competition and Regulation in Network Industries, , vol. 17(1), pages 2-31, March.
    10. Haleh Delnava & Kristiaan Kerstens & Timo Kuosmanen & Zhiyang Shen, 2024. "Semi-parametric Estimation of Convex and Nonconvex By-Production Technologies," Working Papers 2024-EQM-02, IESEG School of Management.
    11. 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

    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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