IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Regulation and Measuring Cost-Efficiency with Panel Data Models: Application to Electricity Distribution Utilities

Author Info

Listed author(s):
  • Mehdi Farsi
  • Massimo Filippini

    ()

    (Center for Energy Policy and Economics, Federal Institute of Technology, University of Lugano, ETH Zentrum, WEC, 8092 Zurich, Switzerland; Department of Economics, University of Lugano, Via Ospedale 13, 6900 Lugano, Switzerland; CEPE, ETH Zentrum, CH-8092, Zurich, Switzerland. Tel: +41-1-632-0649; Fax: +41-1-632-1050)

Abstract

This paper examines the performance of panel data models in measuring cost-efficiency of electricity distribution utilities. Different cost frontier models are applied to a sample of 59 utilities operating in Switzerland from 1988 to 1996. The estimated coefficients and inefficiency scores are compared across different specifications. The results indicate that while the average inefficiency is not sensitive to the econometric specification, the efficiency ranking varies significantly across models. The reasonably low out-of-sample prediction errors suggest that panel data models can be used as a prediction instrument in order to narrow the information gap between the regulator and regulated companies.

Download Info

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.

File URL: http://journals.kluweronline.com/issn/0889-938X/contents
Download Restriction: Access to full text is restricted to subscribers.

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.

Article provided by Springer & The Industrial Organization Society in its journal Review of Industrial Organization.

Volume (Year): 25 (2004)
Issue (Month): 1 (08)
Pages: 1-19

as
in new window

Handle: RePEc:kap:revind:v:25:y:2004:i:1:p:1-19
Contact details of provider: Web page: http://www.springer.com

Web page: http://www.ios.neu.edu/index.htm

More information through EDIRC

Order Information: Web: http://www.springer.com/economics/industrial+organization/journal/11151/PS2

Keywords:

Other versions of this item:

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.:

as
in new window


  1. 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.
  2. Greene, William H., 1980. "Maximum likelihood estimation of econometric frontier functions," Journal of Econometrics, Elsevier, vol. 13(1), pages 27-56, May.
  3. Efthymios G. Tsionas, 2002. "Stochastic frontier models with random coefficients," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(2), pages 127-147.
  4. Kajal Lahiri, 2005. "Analysis of Panel Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 1093-1095.
  5. Antonioli, B. & Filippini, M., 2001. "The use of a variable cost function in the regulation of the Italian water industry," Utilities Policy, Elsevier, vol. 10(3-4), pages 181-187.
  6. Bauer, Paul W. & Berger, Allen N. & Ferrier, Gary D. & Humphrey, David B., 1998. "Consistency Conditions for Regulatory Analysis of Financial Institutions: A Comparison of Frontier Efficiency Methods," Journal of Economics and Business, Elsevier, vol. 50(2), pages 85-114, March.
  7. Filippini, Massimo & Maggi, Rico, 1993. "Efficiency and Regulation in the Case of the Swiss Private Railways," Journal of Regulatory Economics, Springer, vol. 5(2), pages 199-216, June.
  8. Baillie, R.T. & Baltagi, B.H., 1994. "Prediction from the Regression Model with one-way Error Components," Papers 9405, Michigan State - Econometrics and Economic Theory.
  9. Rossi, Martin Antonio & Ruzzier, Christian Alejandro, 2000. "On the regulatory application of efficiency measures," Utilities Policy, Elsevier, vol. 9(2), pages 81-92, June.
  10. Foreman-Peck, James & Waterson, Michael, 1985. "The Comparative Efficiency of Public and Private Enterprise in Britain: Electricity Generation between the World Wars," Economic Journal, Royal Economic Society, vol. 95(380a), pages 83-95, Supplemen.
  11. Jamasb, T. & Pollitt, M., 2001. "Benchmarking and Regulation of Electricity Transmission and Distribution Utilities: Lessons from International Experience," Cambridge Working Papers in Economics 0101, Faculty of Economics, University of Cambridge.
  12. SIMAR, Léopold, "undated". "Estimating efficiencies from frontier models with panel data: a comparison of parametric, non-parametric and semi-parametric metods with bootstrapping," CORE Discussion Papers RP 995, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  13. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
  14. Filippini, Massimo & Wild, Jorg, 2001. "Regional differences in electricity distribution costs and their consequences for yardstick regulation of access prices," Energy Economics, Elsevier, vol. 23(4), pages 477-488, July.
  15. Schmidt, Peter & Sickles, Robin C, 1984. "Production Frontiers and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 367-374, October.
  16. Battese, George E., 1992. "Frontier production functions and technical efficiency: a survey of empirical applications in agricultural economics," Agricultural Economics, Blackwell, vol. 7(3-4), pages 185-208, October.
  17. Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
  18. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
  19. Battese, George E., 1992. "Frontier production functions and technical efficiency: a survey of empirical applications in agricultural economics," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 7(3-4), October.
  20. Richmond, J, 1974. "Estimating the Efficiency of Production," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(2), pages 515-521, June.
Full references (including those not matched with items on IDEAS)

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

as
in new window


Cited by:
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Access and download statistics

When requesting a correction, please mention this item's handle: RePEc:kap:revind:v:25:y:2004:i:1:p:1-19. 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: (Sonal Shukla)

or (Rebekah McClure)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.