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dc.contributor.authorBjørndal, Endre
dc.contributor.authorBjørndal, Mette
dc.contributor.authorCullmann, Astrid
dc.contributor.authorNieswand, Maria
dc.date.accessioned2016-02-25T14:11:04Z
dc.date.available2016-02-25T14:11:04Z
dc.date.issued2016-02-25
dc.identifier.issn1500-4066
dc.identifier.urihttp://hdl.handle.net/11250/2380613
dc.description.abstractRevenue cap regulation is often combined with systematic benchmarking to reveal the managerial inefficiencies when regulating natural monopolies. One example is the European energy sector, where benchmarking methods are based on actual cost data, which are influenced by managerial inefficiency as well as operational heterogeneity. This paper demonstrates how a conditional nonparametric method, which allows the comparison of firms operating under heterogeneous technologies, can be used to estimate managerial inefficiency. A dataset of 123 distribution firms in Norway is used to show aggregate and firm-specific effects of conditioning. By comparing the unconditional model to our proposed conditional model and the model presently used by the Norwegian regulator, we see that the use of conditional benchmarking methods in revenue cap regulation may effectively distinguish between managerial inefficiency and operational heterogeneity. This distinction leads first to a decrease in aggregate efficient costs and second to a reallocation effect that affects the relative profitability of firms and relative customer prices, thus providing a fairer basis for setting revenue caps.nb_NO
dc.language.isoengnb_NO
dc.publisherFORnb_NO
dc.relation.ispartofseriesDiscussion paper;4/16
dc.subjectData Envelopment Analysisnb_NO
dc.subjectYardstick Regulationnb_NO
dc.subjectElectricity Distributionnb_NO
dc.titleFinding the Right Yardstick: Regulation under Heterogeneous Environmentsnb_NO
dc.typeWorking papernb_NO
dc.source.pagenumber37nb_NO


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