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Application of Network DEA Model to Vertically Integrated Electric Utilities

Author

Listed:
  • Miki Tsutsui

    (Central Research Institute of Electric Power Industry)

  • Kaoru Tone

    (National Graduate Institute for Policy Studies)

Abstract

Liberalization of the electric power industry has been underway in various countries. Under this situation, it is necessary for electric power companies to improve their management efficiency in order to survive in a competitive market. This study examines management efficiency of vertically integrated electric companies, which consist of several divisions, such as generation, transmission, distribution and so forth. Previous studies mainly focused on efficiency of only a specific division independently. However, we should evaluate firm-level management efficiency based on divisional efficiencies, because these divisions are closely linked each other. For measuring firm-level efficiency, we apply a network DEA model that considers a streamlined relationship among divisions under vertical integration. Furthermore we newly proposed a constrained network DEA model to obtain more practical efficiency index.

Suggested Citation

  • Miki Tsutsui & Kaoru Tone, 2007. "Application of Network DEA Model to Vertically Integrated Electric Utilities," GRIPS Discussion Papers 07-03, National Graduate Institute for Policy Studies.
  • Handle: RePEc:ngi:dpaper:07-03
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    References listed on IDEAS

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    1. Thomas Sexton & Herbert Lewis, 2003. "Two-Stage DEA: An Application to Major League Baseball," Journal of Productivity Analysis, Springer, vol. 19(2), pages 227-249, April.
    2. Raad Yahya Qassim & Gilberto Corso & Liacir dos Santos Lucena & Zieli Dutra Thome, 2005. "Application of data envelopment analysis in the performance evaluation of electricity distribution: a review," International Journal of Business Performance Management, Inderscience Enterprises Ltd, vol. 7(1), pages 60-70.
    3. Fare, Rolf & Grosskopf, Shawna, 2000. "Network DEA," Socio-Economic Planning Sciences, Elsevier, vol. 34(1), pages 35-49, March.
    4. Førsund, Finn R. & Kittelsen, Sverre A. C., 1998. "Productivity development of Norwegian electricity distribution utilities," Resource and Energy Economics, Elsevier, vol. 20(3), pages 207-224, September.
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    Cited by:

    1. Yueh-Chiang Lee & Yao-Hung Yang, 2014. "Performance Of Financial Holding Companies In Taiwan: An Application Of Network Data Envelopment Analysis," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 8(3), pages 19-30.

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