Regulation and measuring cost-efficiency with panel data models
application to electricity distribution utilities
Additional information
Authors
Farsi M.,
Filippini M.
Type
Journal Article
Year
2004
Language
English
Abstract
This paper examines the performance of panel data models in measuring cost efficiency of electricity distribution utilities. Different cost frontier models are applied to a sample of 59 utilities operating in Switzerland from 1988 to 1996. The estimated coefficients and inefficiency scores are compared across different specifications. The results indicate that while the average inefficiency is not sensitive to the econometric specification, the efficiency ranking varies significantly across models. The reasonably low out-of-sample prediction errors suggest that panel data models can be used as a prediction instrument in order to narrow the information gap between the regulator and regulated companies.
Keywords
Cost efficiency, electricity utilities, incentive regulation, yardstick competition
Journal
Review of Industrial Organization
Volume
25
Number ( Month )
1
Pages (or article number)
1-19
Diffusion
License
License undefined
Visibility
Public
Status open access
Green
