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The effect of restructuring electricity distribution systems on firms’ persistent and transient efficiency: The case of Germany

journal contribution
posted on 24.10.2019, 10:57 by Oleg Badunenko, Astrid Cullmann, Subal Kumbhakar, Maria Nieswand
We evaluate the efficiency of electricity distribution operators (DSOs) as providers of local public infrastructure. In particular, we consider two types of efficiency, i.e., short-term (transient) and long-term (persistent). We apply the recently developed four-component stochastic frontier model, which allows identifying determinants of the two types of efficiency, after controlling for firm heterogeneity and random noise, to a panel dataset of German DSOs observed during 2006-2012. Those DSOs operating in the eastern parts of Germany have undergone a profound restructuring after the reunification in 1990. We find that this was beneficial for their efficiency as they perform, on average, better in terms of persistent efficiency than DSOs in West Germany. Both eastern and western DSOs perform similarly well in terms of transient efficiency, which is expected as the sector is highly regulated. As such, we provide new insights on identifying the nature and sources of public infrastructure productive inefficiency, which is relevant for public policies.

Funding

Leibniz Association

History

School

  • Business and Economics

Department

  • Economics

Published in

The Energy Journal

Volume

42

Issue

4

Publisher

International Association for Energy Economics

Version

AM (Accepted Manuscript)

Rights holder

© The Authors

Publisher statement

This article first appeared in The Energy Journal, Vol. 42, No. 4, 2021, DOI: https://doi.org/10.5547/01956574.42.4.obad - Reproduced by permission of the International Association for Energy Economics (IAEE).

Acceptance date

14/10/2019

Publication date

2021-07-31

Copyright date

2021

ISSN

0195-6574

eISSN

1944-9089

Language

en

Depositor

Dr Maria Nieswand. Deposit date: 22 October 2019