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Technical efficiency in electricity generation - the impact of smallness and isolation of island economies

  • Preetum Domah
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    This paper conducts a comparative technical efficiency analysis of electricity generators in 16 small island economies using panel data, and two methodologies: data envelopment analysis (DEA) and stochastic frontier analysis (SFA). The results indicate neither apparent differences in the production structure between islands and non-islands electric utilities, nor any evidence suggesting that they are less technically efficient. At a theoretical level, our results suggest that benchmarking of small islands, using non-island generating utilities as comparators, is both feasible and desirable given the lack of historical generation data for most small islands. On a more empirical basis, our study bridges an important gap in research on the efficiency of small and interconnected electricity systems.

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    File URL: http://www.econ.cam.ac.uk/electricity/publications/wp/ep14.pdf
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    Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0232.

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    Length: 26
    Date of creation: Oct 2002
    Date of revision:
    Handle: RePEc:cam:camdae:0232
    Note: CMI IO
    Contact details of provider: Web page: http://www.econ.cam.ac.uk/index.htm

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    1. Ali Emami Meibodi, 1998. "Efficiency Considerations in the Electricity Supply Industry; The Case of Iran," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 95, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    2. Pollitt, Michael G, 1996. "Ownership and Efficiency in Nuclear Power Production," Oxford Economic Papers, Oxford University Press, vol. 48(2), pages 342-60, April.
    3. Mayer, Peter C., 2000. "Reliability economies of scale for tropical island electric power," Energy Economics, Elsevier, vol. 22(3), pages 319-330, June.
    4. Schmidt, Peter & Lovell, C. A. Knox, 1980. "Estimating stochastic production and cost frontiers when technical and allocative inefficiency are correlated," Journal of Econometrics, Elsevier, vol. 13(1), pages 83-100, May.
    5. Reifschneider, David & Stevenson, Rodney, 1991. "Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 715-23, August.
    6. 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.
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