Scandinavian Working Papers in Economics

Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

No 2015/27: Productivity Development for Norwegian Electricity Distribution Companies 2004-2013

Xiaomei Cheng (), Endre Bjørndal (), Gudbrand Lien () and Mette Bjørndal ()
Additional contact information
Xiaomei Cheng: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Endre Bjørndal: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway
Gudbrand Lien: Faculty of Economics and Organization Science, Lillehammer University College, Postal: Lillehammer University College, Faculty of Economics and Organization Science, N-2604 Lillehammer, Norway
Mette Bjørndal: Dept. of Business and Management Science, Norwegian School of Economics, Postal: NHH , Department of Business and Management Science, Helleveien 30, N-5045 Bergen, Norway

Abstract: Norwegian distribution companies have been subjected to an incentive regulation scheme from 1997, and the efficiency incentives were further strengthened with the introduction of yardstick regulation in 2007. We examine the productivity development for these companies in the period from 2004 to 2013. Using three benchmarking methods, DEA, SFA, and StoNED, we examine productivity change, with the usual decompositions into efficiency change, technical change, and scale efficiency change. Increasing investments and use of accounting-based capital costs in our analysis may lead to a negative bias in the productivity change estimates, and we therefore perform our analysis with and without capital costs. Our results indicate a negative productivity development for the whole period from 2004 to 2013, and we do not observe a positive effect of the change in regulation regime from 2007.

Keywords: Productivity development; DEA; SFA; StoNED

JEL-codes: C00; C10; C14; Q00

23 pages, October 7, 2015

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