Estimation and decomposition of productive efficiency in a panel data model: an application to electric utilities
New econometric methodology for modeling and estimating technical and allocative efficiency in production is proposed and applied. Translog cost frontier and share equations are presented in a panel data context, with the structure of the error terms representing noise and inefficiency. The use of panel data with this multivariate error components approach facilitates the separation of eficiency into its technical and allocative components, as well as the separation of noise from inefficiency. The model used is logically consistent in that the distributional assumptions concerning the disturbance vectors take into account the relationships among the disturbance terms in the cost and share equations. This method of efficiency measurement is applied to the electric utilities industry to obtain individual firm estimates of technical and allocative efficiency. The data consist of yearly cost, output, and input price information on 38 electric utility firms over a period of 18 years. Rate-of-return regulation in the electric utilities industry requires estimation of a regulated cost frontier and the associated share equations. Estimates of technical and allocative efficiency are obtained for each firm in every year. Comparisons are made with previous efficiency measurement studies. The measures of efficiency are analyzed in light of rate-of-return regulation.
- OSTI ID:
- 5785134
- Resource Relation:
- Other Information: Thesis (Ph. D.)
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
POLICY AND ECONOMY
ELECTRIC UTILITIES
EFFICIENCY
REGULATIONS
PRODUCTION
ECONOMIC ANALYSIS
MAXIMUM-LIKELIHOOD FIT
MULTIVARIATE ANALYSIS
RATE STRUCTURE
ECONOMICS
MATHEMATICS
NUMERICAL SOLUTION
PUBLIC UTILITIES
STATISTICS
290200* - Energy Planning & Policy- Economics & Sociology
296000 - Energy Planning & Policy- Electric Power