Economies of vertical integration in the Swiss electricity sector
Over the last two decades, several European nations have introduced reforms to their electricity sector. Generally, these reforms require a legal and functional unbundling of vertically integrated companies. These unbundling processes may reduce the possibilities that exist to fruitfully exploit the advantages of vertical integration. The goal of this paper is to empirically analyze the presence of economies of scale and vertical integration in the Swiss electricity sector. Economies of vertical integration between electricity production and distribution result from reduced transaction costs, better coordination of highly specific and interdependent investments and less financial risk. Different econometric specifications for panel data, including a random effects and a random-coefficients model, have been used to estimate a quadratic multi-stage cost function for a sample of electricity companies. The empirical results reflect the presence of considerable economies of vertical integration and economies of scale for most of the companies considered in the analysis. Moreover, the results suggest a variation in economies of vertical integration across companies due to unobserved heterogeneity.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Greer, Monica L., 2008. "A test of vertical economies for non-vertically integrated firms: The case of rural electric cooperatives," Energy Economics, Elsevier, vol. 30(3), pages 679-687, May.
- repec:cup:cbooks:9780521818551 is not listed on IDEAS
- Massimo Filippini, 1998. "Are Municipal Electricity Distribution Utilities Natural Monopolies?," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 69(2), pages 157-174, 06.
- A. Yatchew, 2000. "Scale economies in electricity distribution: a semiparametric analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(2), pages 187-210.
- Lee, Byung-Joo, 1995. "Separability Test for the Electricity Supply Industry," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 10(1), pages 49-60, Jan.-Marc.
- Kaserman, David L & Mayo, John W, 1991. "The Measurement of Vertical Economies and the Efficient Structure of the Electric Utility Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 39(5), pages 483-502, September.
- E. Martínez-Budría & S. Jara-Díaz & F. Ramos-Real, 2003. "Adapting Productivity Theory to the Quadratic Cost Function. An Application to the Spanish Electric Sector," Journal of Productivity Analysis, Springer, vol. 20(2), pages 213-229, September.
- Giovanni Fraquelli & Massimiliano Piacenza & Davide Vannoni, 2004. "Scope and scale economies in multi-utilities: evidence from gas, water and electricity combinations," Applied Economics, Taylor & Francis Journals, vol. 36(18), pages 2045-2057.
- Pulley, Lawrence B & Braunstein, Yale M, 1992. "A Composite Cost Function for Multiproduct Firms with an Application to Economies of Scope in Banking," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 221-30, May.
- Panzar, John C., 1989. "Technological determinants of firm and industry structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 1, pages 3-59 Elsevier.
- Filippini, Massimo & Hrovatin, Nevenka & Zoric, Jelena, 2004.
"Efficiency and regulation of the Slovenian electricity distribution companies,"
Elsevier, vol. 32(3), pages 335-344, February.
- Massimo Filippini & Nevenka Hrovatin & Jelena Zoric, 2002. "Efficiency and Regulation of the Slovenian Electricity Distribution Companies," CEPE Working paper series 02-14, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Giovanni Fraquelli & Massimiliano Piacenza & Davide Vannoni, 2005. "Cost Savings From Generation and Distribution with an Application to Italian Electric Utilities," Journal of Regulatory Economics, Springer, vol. 28(3), pages 289-308, November.
- Kwoka, John E., 2002. "Vertical economies in electric power: evidence on integration and its alternatives," International Journal of Industrial Organization, Elsevier, vol. 20(5), pages 653-671, May.
- Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2007. "Economies of Scale and Scope in the Swiss Multi-Utilities Sector," CEPE Working paper series 07-59, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Takanori Ida & Tetsuya Kuwahara, 2004. "Yardstick Cost Comparison and Economies of Scale and Scope in Japan's Electric Power Industry," Asian Economic Journal, East Asian Economic Association, vol. 18(4), pages 423-438, December.
- Jara-Diaz, Sergio & Ramos-Real, Francisco Javier & Martinez-Budria, Eduardo, 2004. "Economies of integration in the Spanish electricity industry using a multistage cost function," Energy Economics, Elsevier, vol. 26(6), pages 995-1013, November.
- repec:cup:cbooks:9780521522717 is not listed on IDEAS
- Michael Maloney, 2001. "Economies and Diseconomies: Estimating Electricity Cost Functions," Review of Industrial Organization, Springer, vol. 19(2), pages 165-180, September.
- Sing, Merrile, 1987. "Are Combination Gas and Electric Utilities Multiproduct Natural Monopolies?," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 392-98, August.
- Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2006.
"Economies of scale and scope in local public transportation,"
CEPE Working paper series
06-48, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2007. "Economies of Scale and Scope in Local Public Transportation," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 41(3), pages 345-361, September.
- Caves, Douglas W & Christensen, Laurits R & Tretheway, Michael W, 1980. "Flexible Cost Functions for Multiproduct Firms," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 477-81, August.
- Michaels, Robert J., 2004. "Vertical Integration: The Economics that Electricity Forgot," The Electricity Journal, Elsevier, vol. 17(10), pages 11-23, December.
- Tovar, B. & Jara-Diaz, S. & Trujillo, L., 2007. "Econometric estimation of scale and scope economies within the port sector: a review," Working Papers 07/04, Department of Economics, City University London.
- Gilsdorf, Keith, 1994. "Vertical integration efficiencies and electric utilities: A cost complementarity perspective," The Quarterly Review of Economics and Finance, Elsevier, vol. 34(3), pages 261-282.
- Pulley, Lawrence B & Humphrey, David B, 1993. "The Role of Fixed Costs and Cost Complementarities in Determining Scope Economies and the Cost of Narrow Banking Proposals," The Journal of Business, University of Chicago Press, vol. 66(3), pages 437-62, July.
When requesting a correction, please mention this item's handle: RePEc:eee:eneeco:v:32:y:2010:i:6:p:1325-1330. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.