 Optimal scale in the Italian gas distribution industry using data envelopment analysisFabrizio Erbetta and Luca Rappuoli Omega, 2008, vol. 36, issue 2, 325-336 Abstract: The Italian gas distribution industry presents a high degree of fragmentation. However, the tendency between 1970 and 1998 was a concentration process. Available evidence supports the thesis that local distributors have undertaken a process of scale enlargement. This raises the question of characteristics of returns to scale for such operators as well as the optimal scale at which they should operate. Returns to scale are analysed by data envelopment analysis (DEA) methodology. The results show that the output space in which DMUs attain a high level of scale efficiency is widespread, thus indicating an unexpected return to scale characterisation. Technology shows increasing returns only for the smallest units, but such an effect is rapidly exhausted in favour of a regime of constant returns to scale. The main managerial conclusion is that an improvement of productivity may be reached via an intensification of the merging process involving local distributors operating at a small scale. Moreover, the concentration process appears as an "attainable" objective since the critical dimension, which permits the exploitation of positive returns to scale, is quite small. Keywords: Energy; DEA; Efficiency; Optimal; scale (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:36:y:2008:i:2:p:325-336 Ordering information: This journal article can be ordered from Access Statistics for this article Omega is currently edited by B. Lev More articles in Omega from Elsevier |
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