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Environmental Efficiency Assessment of Iranian Electric Power Companies: Comparison between Radial and Non-Radial Models

Author

Listed:
  • Mamipour, Siab

    (Assistant Professor in Economics, Kharazmi University)

  • Najafzadeh, Behnam

    (MA Student of Socio-Economic Systems, Kharazmi University,)

Abstract

This study uses DEA non-parametric approach (Data Envelopment Analysis) to measure the environmental efficiency of 16 Iranian electric power companies during the period (2010-2014). The proposed approach incorporates not only the output separation (desirable and undesirable) but also the input separation (energy and non-energy). This study discusses some non-radial models) slack based measure, Slack based measure based on directional distance function, Range adjusted measure) and compare them with other previous DEA radial models (CCR, Directional distance function) used for the performance evaluation of electric power companies. After the methodological comparison, this study applies the proposed approaches for measuring the environmental efficiency of Iranian fossil fuel power generation. The results show that Kerman and Khuzestan electric power companies belong to a high level of environmental efficiency and the worst performers are Sistan and Baluchestan and Fars companies in term of fossil fuel power generation. Finally, we can conduct a rank sum test based upon their ranking scores to obtain a statistical inference. We find two economic implications. One of the two implications is that no major change has occurred in the operational performance of Iranian electric power industry from 2010 to 2014. The other implication indicates that there are strategic differences in the operation of Iranian electric power firms after the liberalization.

Suggested Citation

  • Mamipour, Siab & Najafzadeh, Behnam, 2016. "Environmental Efficiency Assessment of Iranian Electric Power Companies: Comparison between Radial and Non-Radial Models," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 3(3), pages 153-178, November.
    • Handle: RePEc:ris:qjatoe:0055
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    Keywords

    Environmental efficiency; Power generation companies; Radial and Non-Radial models.;
    All these keywords.

    JEL classification:

    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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