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Overcoming Data Limitations in Nonparametric Benchmarking: Applying PCA-DEA to Natural Gas Transmission

Author

Listed:
  • Nieswand Maria

    (German Institute for Economic Research (DIW Berlin))

  • Cullmann Astrid

    (German Institute for Economic Research (DIW Berlin))

  • Neumann Anne

    (German Institute for Economic Research (DIW Berlin))

Abstract

We empirically demonstrate a practical approach of efficiency evaluation with limited data availability in some regulated industries. We apply PCA-DEA for radial efficiency measurement to U.S. natural gas transmission companies in 2007. PCA-DEA reduces dimensions of the optimization problem while maintaining most of the variation in the original data. Our results suggest that the methodology reduces the probability of over-estimation of individual firm-specific performance.

Suggested Citation

  • Nieswand Maria & Cullmann Astrid & Neumann Anne, 2010. "Overcoming Data Limitations in Nonparametric Benchmarking: Applying PCA-DEA to Natural Gas Transmission," Review of Network Economics, De Gruyter, vol. 9(2), pages 1-22, June.
  • Handle: RePEc:bpj:rneart:v:9:y:2010:i:2:n:4
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    Cited by:

    1. Maria Nieswand & Matthias Walter, 2010. "Cost Efficiency and Subsidization in German Local Public Bus Transit," Discussion Papers of DIW Berlin 1071, DIW Berlin, German Institute for Economic Research.

    More about this item

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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