Use of Data Envelopment Analysis for Incentive Regulation of Electric Distribution Firms

Rajiv Banker, Finn Førsund and Daqun Zhang

Data Envelopment Analysis Journal, 2017, vol. 3, issue 1-2, 1-47

Abstract: Regulators worldwide increasingly use data envelopment analysis (DEA) for the incentive regulation of electric distribution firms. Although the production/cost frontiers estimated by DEA models provide valuable information for electricity rate setting, the benefit of DEA benchmarking in regulatory practice would be limited due to specification errors of DEA models. In this paper, we summarize and discuss existing issues of using DEA models for efficiency benchmarking from four aspects: 1. Specification of inputs and outputs, 2. Selection of costs for benchmarking, 3. Imposition of structure on benchmarking models, and 4. Treatment of contextual variables. We also give suggestions for improving the use of DEA models.

Keywords: Incentive regulation; Electricity distribution; Data envelopment analysis (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://dx.doi.org/10.1561/103.00000020 (application/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:now:jnldea:103.00000020

Access Statistics for this article

More articles in Data Envelopment Analysis Journal from now publishers
Bibliographic data for series maintained by Lucy Wiseman ().