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

Abstract

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). * Comments of a referee are gratefully acknowledged. We also thank Knox Lovell for helpful suggestions. The usual disclaimer applies.

Pollution‐adjusted productivity analysis: The use of Malmquist and Luenberger productivity measures

“…It follows that the multiplicative and the additive productivity measures are respectively the PM index and the PL productivity indicator. In such a case, our approach involves theoretical (Briec et al 2004; Chavas & Briec, 2012, 2018; Dasgupta & Mäler 2003; Tschirhart 2012) implications and suggests empirical investigations (De Borger, 1996; Grifell‐Tatjé & Kerstens, 2008). These works could be of particular interest in a future research.…”

“…3 3Indeed, relaxing convexity assumption implies major theoretical (Briec, Kerstens, & Vanden Eeckaut, 2004; Chavas & Briec, 2003, 2012; 2018; 2012) and empirical implications (De Borger, 1996; Grifell‐Tatjé & Kerstens, 2008). …”

A generalization of environmental productivity analysis

“…Therefore, the convexity property is not required to analyse environmental productivity variation. These results are of particular interest for theoretical (Dasgupta and Mäler, 2003;Tschirhart, 2012;Briec, 2012, 2018) and empirical (De Borger and Kerstens, 1996; Grifell-Tatjé and Kerstens, 2008) studies.…”

Economic and Environmental Decomposition of Luenberger-Hicks-Moorsteen Total Factor Productivity Indicator: Empirical Analysis of Chinese Textile Firms With a Focus on Reporting Infeasibilities and Questioning Convexity

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