This note illustrates the potential impact of the specification of a convex production technology on establishing minimal costs compared to the use of a non-convex technology when benchmarking electricity distributors. This methodological reflection is mainly motivated by recent engineering literature providing evidence for non-convexities in electricity distribution. An empirical illustration using non-parametric specifications of technology illustrates this main point using a sample of Spanish electricity distribution firms earlier analysed in © 2008 The Authors Journal compilation © CIRIEC 2008.
|Journal||Annals of Public and Cooperative Economics|
|Publication status||Published - 1 Jun 2008|
Grifell-Tatjé, E., & Kerstens, K. (2008). Incentive regulation and the role of convexity in benchmarking electricity distribution: Economists versus engineers. Annals of Public and Cooperative Economics, 79, 227-248. https://doi.org/10.1111/j.1467-8292.2008.00364.x