Optimal scale in the Italian gas distribution industry using data envelopment analysis
The Italian gas distribution industry presents a high degree of fragmentation. However, the tendency between 1970 and 1998 was a concentration process. Available evidence supports the thesis that local distributors have undertaken a process of scale enlargement. This raises the question of characteristics of returns to scale for such operators as well as the optimal scale at which they should operate. Returns to scale are analysed by data envelopment analysis (DEA) methodology. The results show that the output space in which DMUs attain a high level of scale efficiency is widespread, thus indicating an unexpected return to scale characterisation. Technology shows increasing returns only for the smallest units, but such an effect is rapidly exhausted in favour of a regime of constant returns to scale. The main managerial conclusion is that an improvement of productivity may be reached via an intensification of the merging process involving local distributors operating at a small scale. Moreover, the concentration process appears as an "attainable" objective since the critical dimension, which permits the exploitation of positive returns to scale, is quite small.
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.
Volume (Year): 36 (2008)
Issue (Month): 2 (April)
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/supportfaq.cws_home/regional|
References listed on IDEAS
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.:
- Kumbhakar, Subal C. & Hjalmarsson, Lennart, 1998. "Relative performance of public and private ownership under yardstick competition: electricity retail distribution," European Economic Review, Elsevier, vol. 42(1), pages 97-122, January.
- Guldmann, Jean-Michel, 1984. "A further note on the structure of gas distribution costs in urban areas," Regional Science and Urban Economics, Elsevier, vol. 14(4), pages 583-588, November.
- Thanassoulis, Emmanuel, 2000. "DEA and its use in the regulation of water companies," European Journal of Operational Research, Elsevier, vol. 127(1), pages 1-13, November.
- Cubbin, John & Tzanidakis, George, 1998. "Regression versus data envelopment analysis for efficiency measurement: an application to the England and Wales regulated water industry," Utilities Policy, Elsevier, vol. 7(2), pages 75-85, June.
- Banker, Rajiv D., 1984. "Estimating most productive scale size using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 17(1), pages 35-44, July.
- Paola Fabbri & Giovanni Fraquelli & Roberto Giandrone, 2000. "Costs, technology and ownership of gas distribution in Italy," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(2), pages 71-81.
- Rajiv D. Banker & Richard C. Morey, 1986. "The Use of Categorical Variables in Data Envelopment Analysis," Management Science, INFORMS, vol. 32(12), pages 1613-1627, December.
- Fare, Rolf & Grosskopf, Shawna & Lovell, C A Knox, 1983. " The Structure of Technical Efficiency," Scandinavian Journal of Economics, Wiley Blackwell, vol. 85(2), pages 181-90.
- Førsund, Finn R. & Hjalmarsson, Lennart, 2002.
"Are all Scales Optimal in DEA? Theory and Empirical Evidence,"
Working Papers in Economics
66, University of Gothenburg, Department of Economics.
- Finn Førsund & Lennart Hjalmarsson, 2004. "Are all Scales Optimal in DEA? Theory and Empirical Evidence," Journal of Productivity Analysis, Springer, vol. 21(1), pages 25-48, January.
- Lennart Hjalmarsson & Finn R. Førsund, 2002. "Are all scales optimal in Dea? Theory and empirical evidence," ICER Working Papers 14-2002, ICER - International Centre for Economic Research.
- Kerstens, Kristiaan & Vanden Eeckaut, Philippe, 1999.
"Estimating returns to scale using non-parametric deterministic technologies: A new method based on goodness-of-fit,"
European Journal of Operational Research,
Elsevier, vol. 113(1), pages 206-214, February.
- KERSTENS, Kristiaan & VANDEN EECKAUT, Philippe, 1997. "Estimating returns to scale using nonparametric deterministic technologies : a new method based on goodness-of-fit," CORE Discussion Papers 1997013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Bagdadioglu, Necmiddin & Waddams Price, Catherine M. & Weyman-Jones, Thomas G., 1996. "Efficiency and ownership in electricity distribution: A non-parametric model of the Turkish experience," Energy Economics, Elsevier, vol. 18(1-2), pages 1-23, April.
- 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.
- Thanassoulis, Emmanuel, 2000. "The use of data envelopment analysis in the regulation of UK water utilities: Water distribution," European Journal of Operational Research, Elsevier, vol. 126(2), pages 436-453, October.
- Banker, Rajiv D. & Thrall, R. M., 1992. "Estimation of returns to scale using data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 62(1), pages 74-84, October.
When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:36:y:2008:i:2:p:325-336. 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 you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.