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Scale and cost efficiency in the Swiss electricity distribution industry: evidence from a frontier cost approach

  • Massimo Filippini

    ()

    (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Jörg Wild

    (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Michael Kuenzle

    (Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerlan)

The deregulation of the electricity industry is currently on the political agenda in many countries. In most countries, the deregulation of the sector is combined with a (re-) regulation of the electricity networks in most of the countries. In this paper, we analyze the costs structure of 59 Swiss electricity distribution network operators with respect to cost and scale efficiency of the industry. A stochastic frontier model is applied to estimate the average costs of efficient network operators as a benchmark for the industry. Moreover, the heterogeneity of service areas is taken into account. The Swiss authorities might use our results to regulate the prices for the access to the distribution networks.

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File URL: http://www.cepe.ethz.ch/publications/workingPapers/CEPE_WP08.pdf
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Paper provided by CEPE Center for Energy Policy and Economics, ETH Zurich in its series CEPE Working paper series with number 01-08.

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Length: 20 pages
Date of creation: Jun 2001
Date of revision:
Handle: RePEc:cee:wpcepe:01-08
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  1. SIMAR, Léopold, . "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).
  2. 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.
  3. Massimo Filippini & Paola Prioni, 1994. "Is Scale and Cost Inefficiency in the Swiss Bus Industry a Regulatory Problem? Evidence from a Frontier Cost Approach," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 1(2), pages 219-232.
  4. 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.
  5. Coelli, Tim J. & Battese, George E., 1994. "Identification of Factors which Influence the Technical Inefficiency of Indian Farmers," 1994 Conference (38th), February 8-10, 1994, Wellington, New Zealand 148110, Australian Agricultural and Resource Economics Society.
  6. Mark J. Roberts, 1986. "Economies of Density and Size in the Production and Delivery of Electric Power," Land Economics, University of Wisconsin Press, vol. 62(4), pages 378-387.
  7. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
  8. Burns, Philip & Weyman-Jones, Thomas G, 1996. "Cost Functions and Cost Efficiency in Electricity Distribution: A Stochastic Frontier Approach," Bulletin of Economic Research, Wiley Blackwell, vol. 48(1), pages 41-64, January.
  9. 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.
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