Overcoming Data Limitations in Nonparametric Benchmarking: Applying PCA-DEA to Natural Gas Transmission

Nieswand Maria, Astrid Cullmann and Anne Neumann
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Nieswand Maria: German Institute for Economic Research (DIW Berlin)

Review of Network Economics, 2010, vol. 9, issue 2, 22

Abstract: We empirically demonstrate a practical approach of efficiency evaluation with limited data availability in some regulated industries. We apply PCA-DEA for radial efficiency measurement to U.S. natural gas transmission companies in 2007. PCA-DEA reduces dimensions of the optimization problem while maintaining most of the variation in the original data. Our results suggest that the methodology reduces the probability of over-estimation of individual firm-specific performance.

Keywords: efficiency analysis; PCA-DEA; network regulation; natural gas transmission (search for similar items in EconPapers)
Date: 2010
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Working Paper: Overcoming Data Limitations in Nonparametric Benchmarking: Applying PCA-DEA to Natural Gas Transmission (2009)
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DOI: 10.2202/1446-9022.1209

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