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From transition to competition

  • Astrid Cullmann
  • Christian von Hirschhausen

In this paper, we test the hypothesis that the economic transition toward a market economy increases the efficiency of firms. We study 32 Polish electricity distribution companies between 1997 and 2002, by applying common benchmarking methods to the panel: the non-parametric data envelopment analysis (DEA), the free disposal hull (FDH), and, as a parametric approach, the stochastic frontier analysis (SFA). We then measure and decompose productivity change with Malmquist indices. We find that the technical efficiency of the companies has indeed increased during the transition, while allocative efficiency has deteriorated. We also find significantly increasing returns to scale, suggesting that the regulatory authority should allow companies to merge into larger units. Copyright (c) 2008 The Authors.

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Article provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.

Volume (Year): 16 (2008)
Issue (Month): 2 (04)
Pages: 335-357

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Handle: RePEc:bla:etrans:v:16:y:2008:i:2:p:335-357
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