TY - JOUR
T1 - Static efficiency decompositions and capacity utilization: Integrating economic and technical capacity notions
AU - de Borger, Bruno
AU - Kerstens, Kristiaan
AU - Prior, Diego
AU - Van de Woestyne, Ignace
PY - 2012/11/1
Y1 - 2012/11/1
N2 - Starting from existing static decompositions of overall economic efficiency on nonparametric production and cost frontiers, this article proposes more comprehensive decompositions including several cost-based notions of capacity utilization. Furthermore, in case prices are lacking, we develop additional decompositions of overall technical efficiency integrating a technical concept of capacity utilization. These new efficiency decompositions provide a link between short and long run economic analysis and, in empirical work, avoid conflating inefficiency and differences in capacity utilization. An empirical analysis using a monthly panel of Chilean hydroelectric power plants illustrates the potential of these decomposition proposals. © 2012 Taylor & Francis.
AB - Starting from existing static decompositions of overall economic efficiency on nonparametric production and cost frontiers, this article proposes more comprehensive decompositions including several cost-based notions of capacity utilization. Furthermore, in case prices are lacking, we develop additional decompositions of overall technical efficiency integrating a technical concept of capacity utilization. These new efficiency decompositions provide a link between short and long run economic analysis and, in empirical work, avoid conflating inefficiency and differences in capacity utilization. An empirical analysis using a monthly panel of Chilean hydroelectric power plants illustrates the potential of these decomposition proposals. © 2012 Taylor & Francis.
KW - Capacity utilization
KW - Efficiency
U2 - 10.1080/00036846.2011.587783
DO - 10.1080/00036846.2011.587783
M3 - Article
VL - 44
SP - 4125
EP - 4141
IS - 31
ER -