Relative Performance of U.S. and Japanese Electricity Distribution: An Application of Stochastic Frontier Analysis
This paper estimates and compares the technical efficiency of the U.S. and Japanese electric utilities during the period 1982–1997 using a stochastic frontier analysis. Our focus is on electricity distribution services of major investor-owned utilities. We employ translog input distance functions to represent the technology of electricity distribution. Empirical results show that after controlling for environmental variables, on average, the Japanese electric utilities are more efficient. It is shown, however, that some U.S. utilities are as efficient as the most efficient Japanese utilities, indicating that the estimated frontier is not necessarily dominated by Japanese utilities. Copyright Kluwer Academic Publishers 2002
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- Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
- Coelli, Tim & Perelman, Sergio, 1999. "A comparison of parametric and non-parametric distance functions: With application to European railways," European Journal of Operational Research, Elsevier, vol. 117(2), pages 326-339, September.
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