Do mergers improve efficiency? Evidence from restructuring the US electric power sector
This paper analyses the performance impact of the merger wave which took place in the US electricity industry during the period 1994-2003. It does so by analyzing the impact on operating and total cost in electricity distribution. While there are past studies of efficiency and productivity effects, as well as of prices, profits, and other outcomes, this study differs in several ways. First, the database consists of many merging and non-merging firms, rather than only a few on which to base inferences. Second, all of these mergers arise in a single industry, greatly facilitating controlled comparison. Third, we have data on the several years of pre-merger and post-merger efficiency of the specific merging units, unlike virtually all past studies. Finally, we employ a powerful nonparametric technique--data envelopment analysis--to measure the efficiency of each operating unit. The results indicate that electricity mergers are not consistent with improved cost performance.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Anderson, James Earl, 1999. "Making Operational Sense of Mergers and Acquisitions," The Electricity Journal, Elsevier, vol. 12(7), pages 49-59, August.
- Domah, P. & Pollitt, M.G., 2000. "The Restructuring and Privatisation of Electricity Distribution and Supply Businesses in England and Wales: A Social Cost Benefit Analysis," Cambridge Working Papers in Economics 0007, Faculty of Economics, University of Cambridge.
- 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.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004.
"How Much Should We Trust Differences-in-Differences Estimates?,"
The Quarterly Journal of Economics,
MIT Press, vol. 119(1), pages 249-275, February.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
- Robert H. McGuckin & Sang V. Nguyen, 1995. "On Productivity and Plant Ownership Change: New Evidence from the Longitudinal Research Database," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 257-276, Summer.
- 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.
- Gugler, Klaus & Mueller, Dennis C. & Yurtoglu, B. Burcin & Zulehner, Christine, 2003.
"The effects of mergers: an international comparison,"
International Journal of Industrial Organization,
Elsevier, vol. 21(5), pages 625-653, May.
- Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu & Christine Zulehner, 2001. "The Effects of Mergers: An International Comparison," CIG Working Papers FS IV 01-21, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
- Berry, S Keith, 2000. "Excess Returns in Electric Utility Mergers during Transition to Competition," Journal of Regulatory Economics, Springer, vol. 18(2), pages 175-88, September.
- Kira R. Fabrizio & Nancy L. Rose & Catherine D. Wolfram, 2007.
"Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on US Electric Generation Efficiency,"
American Economic Review,
American Economic Association, vol. 97(4), pages 1250-1277, September.
- Kira Markiewicz & Nancy L. Rose & Catherine Wolfram, 2004. "Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency," NBER Working Papers 11001, National Bureau of Economic Research, Inc.
- Jamasb, Tooraj & Pollitt, Michael, 2003. "International benchmarking and regulation: an application to European electricity distribution utilities," Energy Policy, Elsevier, vol. 31(15), pages 1609-1622, December.
- J. David Cummins & Sharon Tennyson & Mary A. Weiss, 1998.
"Consolidation and Efficiency in the U.S. Life Insurance Industry,"
Center for Financial Institutions Working Papers
98-08, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Cummins, J. David & Tennyson, Sharon & Weiss, Mary A., 1999. "Consolidation and efficiency in the US life insurance industry," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 325-357, February.
- J. David Cummins & Sharon Tennyson & Mary A. Weiss, 1998. "Consolidation and efficiency in the U.S. life insurance industry," Working Papers 98-18, Federal Reserve Bank of Philadelphia.
- Fare, R. & Grosskopf, S. & Logan, J., 1985. "The relative performance of publicly-owned and privately-owned electric utilities," Journal of Public Economics, Elsevier, vol. 26(1), pages 89-106, February.
- Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
- 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.
- Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
- Leggio, Karyl B & Lien, Donald, 2000. "Mergers in the Electric Utility Industry in a Deregulatory Environment," Journal of Regulatory Economics, Springer, vol. 17(1), pages 69-85, January.
- Ray, Dennis J & Thompson, Howard E, 1990. ""Fifty in Five": The Prospects for Merger in the Electric Utility Industry," Journal of Regulatory Economics, Springer, vol. 2(2), pages 111-28, June.
- John Becker-Blease & Lawrence Goldberg & Fred Kaen, 2008. "Mergers and acquisitions as a response to the deregulation of the electric power industry: value creation or value destruction?," Journal of Regulatory Economics, Springer, vol. 33(1), pages 21-53, February.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
When requesting a correction, please mention this item's handle: RePEc:eee:indorg:v:28:y:2010:i:6:p:645-656. 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.