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Spatial-Temporal Dimensions of Efficiency among Electric Cooperatives in the Philippines

Author

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  • Lavado, Rouselle F.
  • Barrios, Erniel B.

Abstract

The efficiency of 119 electric cooperatives in the Philippines from 1990 to 2002 is analyzed using a stochastic frontier model augmented with spatial-temporal terms, addressing the underestimation of technical efficiency usually encountered among maximum-likelihood based methods. The model is also robust to the choice of environmental variables that will be included in the inefficiency equation provided that the spatial distance measure substantially captures the efficiency-enhancing factors. The average of estimated technical efficiency is 0.86. The growth in technical efficiency of 1-2% per year is explained by the slow adjustment process in the operation of the cooperatives lacking the medium to feedback production outcomes in the previous year to their operation cycle in the following year. Medium-sized cooperatives need to organize for strategic competitive advantage and to facilitate attainment of production efficiency.

Suggested Citation

  • Lavado, Rouselle F. & Barrios, Erniel B., 2008. "Spatial-Temporal Dimensions of Efficiency among Electric Cooperatives in the Philippines," Discussion Papers DP 2008-29, Philippine Institute for Development Studies.
  • Handle: RePEc:phd:dpaper:dp_2008-29
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    References listed on IDEAS

    as
    1. Filmer, Deon*Pritchett, Lant, 1998. "Estimating wealth effects without expenditure data - or tears : with an application to educational enrollments in states of India," Policy Research Working Paper Series 1994, The World Bank.
    2. Kakwani, Nanak & Wagstaff, Adam & van Doorslaer, Eddy, 1997. "Socioeconomic inequalities in health: Measurement, computation, and statistical inference," Journal of Econometrics, Elsevier, vol. 77(1), pages 87-103, March.
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    More about this item

    Keywords

    technical efficiency; stochastic frontier; electric cooperative; spatial externalities;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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