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A close look at second stage data envelopment analysis using compound error models and the Tobit model

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  • da Silva, Aline Veronese
  • Costa, Marcelo Azevedo
  • Lopes, Ana Lúcia Miranda
  • do Carmo, Gabriela Miranda

Abstract

In 2014 the Brazilian Electricity Regulator (ANEEL) evaluated the efficiency of power distribution utilities using Data Envelopment Analysis (DEA). Estimated efficiencies range from 22.46% to 100%. Although environmental information is available in the data set, corrected efficiencies were not investigated. Different second stage models can be applied to adjust for environmental heterogeneity. Although statistical correlation among efficiencies and environmental variables can be easily estimated, corrected efficiencies are subject to the underlying structure of the second stage model. Therefore, different second stage models may achieve different corrected efficiencies. We provide a detailed statistical analysis of the Tobit model and compound error models for second stage analysis. Limitations are described and the corrected efficiencies using these models are evaluated. Potentially, Brazilian power distribution utilities may achieve substantial changes in estimated efficiencies if second stage analysis is used.

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  • da Silva, Aline Veronese & Costa, Marcelo Azevedo & Lopes, Ana Lúcia Miranda & do Carmo, Gabriela Miranda, 2019. "A close look at second stage data envelopment analysis using compound error models and the Tobit model," Socio-Economic Planning Sciences, Elsevier, vol. 65(C), pages 111-126.
    • Handle: RePEc:eee:soceps:v:65:y:2019:i:c:p:111-126
    DOI: 10.1016/j.seps.2018.04.001
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    Cited by:

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    3. Raúl Pérez-Reyes & Beatriz Tovar, 2021. "Peruvian Electrical Distribution Firms’ Efficiency Revisited: A Two-Stage Data Envelopment Analysis," Sustainability, MDPI, vol. 13(18), pages 1-20, September.
    4. Frýd, Lukáš & Sokol, Ondřej, 2021. "Relationships between technical efficiency and subsidies for Czech farms: A two-stage robust approach," Socio-Economic Planning Sciences, Elsevier, vol. 78(C).
    5. Veronese da Silva, Aline & Costa, Marcelo Azevedo & Lopes-Ahn, Ana Lúcia, 2022. "Accounting multiple environmental variables in DEA energy transmission benchmarking modelling: The 2019 Brazilian case," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).
    6. Brandão, Roberto & Tolmasquim, Maurício T. & Maestrini, Marcelo & Tavares, Arthur Felipe & Castro, Nivalde J. & Ozorio, Luiz & Chaves, Ana Carolina, 2021. "Determinants of the economic performance of Brazilian electricity distributors," Utilities Policy, Elsevier, vol. 68(C).
    7. Afsharian, Mohsen & Kamali, Sara & Ahn, Heinz & Bogetoft, Peter, 2024. "Individualized second stage corrections in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 317(2), pages 563-577.
    8. da Silva, Aline Veronese & Costa, Marcelo Azevedo & Ahn, Heinz & Lopes, Ana Lúcia Miranda, 2019. "Performance benchmarking models for electricity transmission regulation: Caveats concerning the Brazilian case," Utilities Policy, Elsevier, vol. 60(C), pages 1-1.

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