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Industry Restructuring, Mergers, And Efficiency: Evidence From Electric Power

  • Kwoka, J.
  • Pollitt, M.

This paper analyses the performance impact of the merger wave which took place in the US electricity industry during the period 1994-2003. It does so by analyzing the impact on operating and total cost in electricity distribution. While there are past studies of efficiency and productivity effects, as well as of prices, profits, and other outcomes, this study differs in several ways. First, the database consists of many merging and non-merging firms, rather than only a few on which to base inferences. Second, all of these mergers arise in a single industry, greatly facilitating controlled comparison. Third, we have data on the several years of pre-merger and post-merger efficiency of the specific merging units, unlike virtually all past studies. And finally, we employ a powerful nonparametric technique - data envelopment analysis - to measure the efficiency of each operating unit. The results indicate that electricity mergers are not consistent with improved cost performance.

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File URL: http://www.electricitypolicy.org.uk/pubs/wp/eprg0708.pdf
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Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0725.

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Length: 29
Date of creation: May 2007
Date of revision:
Handle: RePEc:cam:camdae:0725
Note: Ec
Contact details of provider: Web page: http://www.econ.cam.ac.uk/index.htm

References listed on IDEAS
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  1. Nancy L. Rose & Kira Markiewicz & Catherine Wolfram, 2004. "Does Competition Reduce Costs? Assessing the Impact of Regulatory Restructuring on U.S. Electric Generation Efficiency," Working Papers 0418, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  2. repec:reg:rpubli:207 is not listed on IDEAS
  3. Paul L. Joskow, 2003. "The Difficult Transition to Competitive Electricity Markets in the U.S," Working Papers 0308, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
  4. Jamasb, T. & Pollitt, M., 2000. "Benchmarking and regulation: international electricity experience," Utilities Policy, Elsevier, vol. 9(3), pages 107-130, September.
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