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Parametric analysis of cost inefficiency and the decomposition of productivity growth for regulated firms

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  • Gerald Granderson

Abstract

This paper examines the contributions of technical change, scale economies, regulation, and efficiency on productivity growth in the interstate natural gas pipeline industry. Following Bauer (1990) productivity growth for firms subject to regulation is decomposed into technical change, scale economies, regulation, and efficiency components. The data sample consists of 20 pipeline companies and covers the period 1977 to 1987. Results indicate that scale economies, cost inefficiency, and regulation on average accounted for 64%, 16%, and 4% of productivity growth respectively. Cost efficiency declined over the sample period, most of which can be attributed to technical inefficiency.

Suggested Citation

  • Gerald Granderson, 1997. "Parametric analysis of cost inefficiency and the decomposition of productivity growth for regulated firms," Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 339-348.
  • Handle: RePEc:taf:applec:v:29:y:1997:i:3:p:339-348
    DOI: 10.1080/000368497327119
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    References listed on IDEAS

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    1. Sickles, Robin C. & Streitwieser, Mary L., 1989. "The Structure Of Technology, Substitution, And Productivity In The Interstate Natural Gas Transmission Industry Under The Natural Gas Policy Act Of 1978," Working Papers 89-17, C.V. Starr Center for Applied Economics, New York University.
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    Cited by:

    1. Mihaela ȘTEȚ, 2013. "Financial Implications Of Technological Progress," SEA - Practical Application of Science, Fundația Română pentru Inteligența Afacerii, Editorial Department, issue 1, pages 192-199, June.
    2. repec:cmj:journl:y:2013:i:27:stetm is not listed on IDEAS
    3. Sangho Kim & Mazlina Shafi'i, 2009. "Factor Determinants of Total Factor Productivity Growth in Malaysian Manufacturing Industries: a decomposition analysis," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 23(1), pages 48-65, May.
    4. Sangho Kim & Gwangho Han, 2001. "A Decomposition of Total Factor Productivity Growth in Korean Manufacturing Industries: A Stochastic Frontier Approach," Journal of Productivity Analysis, Springer, vol. 16(3), pages 269-281, November.
    5. Giannis Karagiannis & George Mergos, 2000. "Total Factor Productivity Growth and Technical Change in a Profit Function Framework," Journal of Productivity Analysis, Springer, vol. 14(1), pages 31-51, July.

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