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Network Utilities Performance and Institutional Quality: Evidence from the Italian Electricity Sector

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  • Golnoush Soroush

    () (Department of Management, Politecnico di Torino, Italy)

  • Carlo Cambini

    (Department of Management, Politecnico di Torino, Italy)

  • Tooraj Jamasb

    (Durham University Business School, Durham University, UK)

  • Manuel Llorca

    (Durham University Business School, Durham University, UK)

Abstract

It is generally accepted that institutions are important for economic development. However, whether the performance of regulated utilities within a country is affected by the quality of institutions is yet to be investigated thoroughly. We analyse how the quality of regional institutions impact performance of Italian electricity distribution utilities. We use a stochastic frontier analysis approach to estimate cost functions and examine the performance of 108 electricity distribution utilities from 2011 to 2015. This unique dataset was constructed with the help of the Italian Regulator for Energy, Networks, and Environment. In addition, we use a recent dataset on regional institutional quality in Italy. We present evidence that utilities in regions with better government effectiveness, responsiveness towards citizens, control of corruption, and rule of law, also tend to be more cost efficient. The results suggest that national regulators should take regional institutional diversity into account in incentive regulation and efficiency benchmarking of utilities.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Golnoush Soroush & Carlo Cambini & Tooraj Jamasb & Manuel Llorca, 2019. "Network Utilities Performance and Institutional Quality: Evidence from the Italian Electricity Sector," Working Papers EPRG1914, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
  • Handle: RePEc:enp:wpaper:eprg1914
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    More about this item

    Keywords

    Institutional quality; stochastic frontier analysis; electricity distribution in Italy; cost efficiency; inefficiency determinants;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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