The impact of ownership unbundling on cost efficiency: Empirical evidence from the New Zealand electricity distribution sector

Filippini, Massimo; Wetzel, Heike

doi:10.1016/j.eneco.2014.08.002

Cited by 37 publications

(27 citation statements)

References 20 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In addition to the above inputs and outputs, regulatory, geographic, climatic, and other conditions may all affect the performance of grid utilities (Growitsch et al, 2012), consequently, we incorporate another dummy variable as well as some weather and geographic variables into the following analysis. The dummy variable, denoted as unbundling   1 d , may measure the impact of the unbundling policy on the grid companies (Çelen, 2013;Filippini and Wetzel, 2014). The policy was implemented in 2002, and most provincial grid companies had finished the reform by the end of 2003, so we set the dummy variable as 1 for all companies after 2004 and 0 otherwise.…”

Section: Data and Samplesmentioning

confidence: 99%

“…The performance assessment of the grid industry has gained increasing attention in recent years. For example, Christian von Hirschhausen et al(2006), Nemoto and Goto (2006), and Ter-Martirosyan and Kwoka (2010) and Filippini and Wetzel (2014) have applied benchmarking techniques to measure the efficiency of network utilities, while Mullarkey et al(2015) and Pérez-Reyes and Tovar(2009) further depict the efficiency change trends over time. One of the main assumptions underlying frontier analysis and technical efficiency measurement is that all the firms in an industry share the same production technology and face a similar operating environment.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Does environmental heterogeneity affect the productive efficiency of grid utilities in China?

et al. 2019

View full text Add to dashboard Cite

China's electricity industry has experienced a reform whereby the generation sector is being opened up to competition but the transmission and distribution sectors are still regulated. Efficiency and benchmarking analyses are widely used for improving the performance of regulated segments, and the impact on efficiency of observable environmental factors, together with unobservable characteristics, has gained increasing attention in recent years. This study uses alternative stochastic frontier models combined with input distance functions to study the productive efficiency of 29 grid firms of China over the period 1993-2014 and investigates the effect of observed environmental factors and unobserved heterogeneity. The results indicate that efficiency is sensitive to model specification and illustrates the presence of observed and unobserved heterogeneity. The number of customers, power delivered and network length are demonstrated to have positive impacts on the utilities' efficiency while adverse environmental conditions harm the operation of grid utilities, but policy regulations may offset the negative impact. Finally, we suggest that there is room for efficiency improvement in the distribution grid, which could be encouraged by incentive regulation, even taking due account of environmental heterogeneity. Cambridge Working Papers in Economics Faculty of Economics www.eprg.group.cam.ac.uk Does environmental heterogeneity affect the productive efficiency of grid utilities in China? EPRG Working Paper 1820

show abstract

Section: Data and Samplesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Does environmental heterogeneity affect the productive efficiency of grid utilities in China?

et al. 2019

View full text Add to dashboard Cite

show abstract

“…Using a cost function Nillesen and Pollitt (2011) analyze New Zealand's introduction of mandatory ownership unbundling of distribution from retail in 1998 and find that ownership unbundling has significantly reduced the unit-operation costs of electricity distribution and that grid quality (proxied by an electricity supply interruption index) has improved. Similar to Nillesen and Pollitt (2011), Filippini and Wetzel (2014) find that ownership unbundling improved the cost efficiency of New Zealand's DSOs based on Stochastic Frontier Analysis (which, in contrast to a standard cost function estimation, deals explicitly with firms' inefficiencies). A novel result is that the short-run efficiency improvement (evaluated from a variable cost function) is higher than the long-run efficiency (evaluated from a total cost function).…”

Section: Literaturementioning

confidence: 61%

Unbundling, Regulation and Pricing: Evidence from Electricity Distribution

2018

View full text Add to dashboard Cite

Unbundling of vertically integrated utilities has become an integral element in the regulation of network industries and has been implemented in many jurisdictions. The idea of separating the network, as the natural monopoly, from downstream retailing, which may be exposed to competition, is still subject to contentious debate. This is because there is much empirical evidence that unbundling eliminates economies of vertical integration while empirical evidence on price reducing effects is still lacking. In this paper we study the effect of legal unbundling on grid charges in the German electricity distribution industry. Using panel data on German distribution system operators (DSOs) we exploit the variation in the timing of the implementation of legal unbundling and the fact that not all DSOs had to implement unbundling measures. We are also able to identify heterogeneous effects of legal unbundling for different types of price regulation, because we observe a switch in the price regulation regime from rate-of-return regulation to incentive regulation during our observation period. Our findings suggest that legal unbundling of the network stage significantly decreases grid charges in the range of 5% to 9%, depending on the type of price regulation in place.

show abstract

“…Hence, the model may suffer from an unobserved heterogeneity bias that, in particular, may lead to an overestimation of markups. For this reason, we additionally estimate a second specification in which the traditional Battese and Coelli (1995) model is augmented by individual firm dummy variables as in Filippini and Wetzel (2014). These variables capture any time-invariant firm-specific unobserved heterogeneity and hence avoid the unobserved heterogeneity problem.…”

Section: Specification Of the Empirical Modelmentioning

confidence: 99%

Investigating the Influence of Firm Characteristics on the Ability to Exercise Market Power A Stochastic Frontier Analysis Approach with an Application to the Iron Ore Market

2014

Self Cite

View full text Add to dashboard Cite

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. AbstractThis paper empirically analyzes the existence of market power in the global iron ore market during the period 1993-2012 using an innovative Stochastic Frontier Analysis approach introducedby Kumbhakar et al. (2012). In contrast to traditional econometric procedures, this approach allows for the estimation of firm-and time-specific Lerner indices and, therefore, the assessment of the influence of individual firm characteristics on the ability to generate markups. We find that markups on average amount to 20%. Moreover, location and experience are identified to be the most important determinants of the magnitude of firm-specific markups.

show abstract

The impact of ownership unbundling on cost efficiency: Empirical evidence from the New Zealand electricity distribution sector

Cited by 37 publications

References 20 publications

Does environmental heterogeneity affect the productive efficiency of grid utilities in China?

Does environmental heterogeneity affect the productive efficiency of grid utilities in China?

Unbundling, Regulation and Pricing: Evidence from Electricity Distribution

Investigating the Influence of Firm Characteristics on the Ability to Exercise Market Power A Stochastic Frontier Analysis Approach with an Application to the Iron Ore Market

Contact Info

Product

Resources

About