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From Transition to Competition: Dynamic Efficiency Analysis of Polish Electricity Distribution Companies

Astrid Cullmann () and Christian Hirschhausen

No 716, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: In this paper we test the hypothesis that the economic transition toward a market economy increases the efficiency of firms. We study 32 Polish electricity distribution companies between 1997-2002, by applying common benchmarking methods to the panel: the nonparametric data envelopment analysis (DEA), the free disposal hull (FDH), and, as a parametric approach, the stochastic frontier analysis (SFA). We then measure and decompose productivity change with Malmquist indices. We find that the technical efficiency of the companies has indeed increased during the transition, while allocative efficiency has deteriorated. We also find significantly increasing returns to scale, suggesting that the regulatory authority should allow companies to merge into larger units.

Keywords: Efficiency analysis; electricity distribution; transition; econometric methods; Poland; DEA; SFA (search for similar items in EconPapers)
JEL-codes: P31 L51 L43 C1 (search for similar items in EconPapers)
Pages: 39 p.
Date: 2007
New Economics Papers: this item is included in nep-com, nep-eff, nep-ene and nep-tra
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