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Incentive Regulation and the Role of Convexity in Benchmarking Electricity Distribution: Economists versus Engineers

Listed author(s):
  • E. Grifell-Tatje
  • K. Kerstens

    (LEM - Lille - Economie et Management - Université de Lille, Sciences et Technologies - Université de Lille, Sciences Humaines et Sociales - CNRS - Centre National de la Recherche Scientifique - UCL - Université catholique de Lille)

This note illustrates the potential impact of the specification of a convex production technology on establishing minimal costs compared to the use of a non-convex technology when benchmarking electricity distributors. This methodological reflection is mainly motivated by recent engineering literature providing evidence for non-convexities in electricity distribution. An empirical illustration using non-parametric specifications of technology illustrates this main point using a sample of Spanish electricity distribution firms earlier analysed in Grifell-Tatjé and Lovell (2003).

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Paper provided by HAL in its series Post-Print with number hal-00280784.

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Date of creation: 2008
Publication status: Published in Annals of Public and Cooperative Economics, Wiley, 2008, 79 (2), pp.227-248
Handle: RePEc:hal:journl:hal-00280784
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00280784
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