Incentive Regulation And The Role Of Convexity In Benchmarking Electricity Distribution: Economists Versus Engineers
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) . Copyright © 2008 The Authors Journal compilation © CIRIEC 2008.
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Volume (Year): 79 (2008)
Issue (Month): 2 (06)
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