Data envelopment analysis and dynamic yardstick competition in Scandinavian electricity distribution

Data envelopment analysis and dynamic yardstick competition in Scandinavian electricity distribution

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Article ID: iaor20053159
Country: Netherlands
Volume: 23
Issue: 2
Start Page Number: 173
End Page Number: 201
Publication Date: May 2005
Journal: Journal of Productivity Analysis
Authors: , ,
Keywords: statistics: data envelopment analysis
Abstract:

Multi-period multi-product regulatory schemes for electricity distributors are presented, based on cost information from a productivity analysis model and an agency theoretical decision model. The proposed schemes are operational and demonstrate considerable advantages compared to the popular CPI-X revenue cap regulation. The schemes avoid arbitrariness, excessively high or negative informational rents as well as ratchet effects and they promote rapid productivity catch-up by making full use of available data. More generally, the paper contributes to the theoretical unification between firm based Data Envelopment Analysis productivity models and micro-economic reimbursement theories.

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