IDEAS home Printed from https://ideas.repec.org/a/ibf/gjbres/v5y2011i1p55-63.html
   My bibliography  Save this article

Local Monopoly, Network Effects And Technical Efficiency €“ Evidence From Taiwan’S Natural Gas Industry

Author

Listed:
  • Ting-Kun Liu

Abstract

This paper examines the optimal number of natural gas firms in each region of Taiwan. In order to separate large local monopoly companies from the small ones, this paper constructs a firm-level panel data analysis for the industry covering the period 1995-1999. The optimal number of firms in each region is estimated by using the minimum efficient scale theory. In addition, a non-neutral stochastic frontier production function is used to detect the impact of the local monopoly, the network effects and cost structure on the natural gas firms’ technical efficiency.

Suggested Citation

  • Ting-Kun Liu, 2011. "Local Monopoly, Network Effects And Technical Efficiency €“ Evidence From Taiwan’S Natural Gas Industry," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 5(1), pages 55-63.
    • Handle: RePEc:ibf:gjbres:v:5:y:2011:i:1:p:55-63
    as

    Download full text from publisher

    File URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v5n1-2011/GJBR-V5N1-2011-5.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Aivazian, Varouj A, et al, 1987. "Economies of Scale versus Technological Change in the Natural Gas Transmission Industry," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 556-561, August.
    2. Chermak Janie M. & Patrick Robert H., 1995. "A Well-Based Cost Function and the Economics of Exhaustible Resources: The Case of Natural Gas," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 174-189, March.
    3. Hung-jen Wang & Peter Schmidt, 2002. "One-Step and Two-Step Estimation of the Effects of Exogenous Variables on Technical Efficiency Levels," Journal of Productivity Analysis, Springer, vol. 18(2), pages 129-144, September.
    4. Bhattacharyya, Arunava & Harris, Thomas R. & Narayanan, Rangesan & Raffiee, Kambiz, 1995. "Specification and estimation of the effect of ownership on the economic efficiency of the water utilities," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 759-784, December.
    5. Tai-Hsin Huang, 2005. "A Study on the Productivities of IT Capital and Computer Labor: Firm-level Evidence from Taiwan’s Banking Industry," Journal of Productivity Analysis, Springer, vol. 24(3), pages 241-257, November.
    6. Peter S. Burton, 1994. "Product Portfolios and the Introduction of New Products: An Example from the Insecticide Industry," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 128-140, Spring.
    7. Filippini, Massimo & Wild, Jorg, 2001. "Regional differences in electricity distribution costs and their consequences for yardstick regulation of access prices," Energy Economics, Elsevier, vol. 23(4), pages 477-488, July.
    8. Fuss, Melvyn A. & Gupta, Vinod K., 1981. "A cost function approach to the estimation of minimum efficient scale, returns to scale, and suboptimal capacity : With an application to Canadian manufacturing," European Economic Review, Elsevier, vol. 15(2), pages 123-135.
    9. Sing, Merrile, 1987. "Are Combination Gas and Electric Utilities Multiproduct Natural Monopolies?," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 392-398, August.
    10. Gort, Michael & Sung, Nakil, 1999. "Competition and Productivity Growth: The Case of the U.S. Telephone Industry," Economic Inquiry, Western Economic Association International, vol. 37(4), pages 678-691, October.
    11. Nemoto, Jiro & Nakanishi, Yasuo & Madono, Seishi, 1993. "Scale Economies and Over-capitalization in Japanese Electric Utilities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(2), pages 431-460, May.
    12. Bernard, Jean-Thomas & Weiner, Robert J., 1996. "Export pricing in state-owned and private MNEs: Evidence from the international petroleum market," International Journal of Industrial Organization, Elsevier, vol. 14(5), pages 647-668, July.
    13. Douglas W. Caves & Laurits R. Christensen & Michael W. Tretheway, 1984. "Economies of Density versus Economies of Scale: Why Trunk and Local Service Airline Costs Differ," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 471-489, Winter.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Carlos F. Ceballos Ferroglio & Gustavo Ferro & Ã ngel Enrique Neder, 2024. "Regulatory lag, efficiency, and performance. Lessons from a case study," Competition and Regulation in Network Industries, , vol. 25(1), pages 43-66, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Farsi, Mehdi & Filippini, Massimo, 2009. "An analysis of cost efficiency in Swiss multi-utilities," Energy Economics, Elsevier, vol. 31(2), pages 306-315, March.
    2. Jinjin Zhao, 2020. "Productivity change in the privatized water sector in China (1999–2006)," Journal of Productivity Analysis, Springer, vol. 53(2), pages 227-241, April.
    3. Ali Akkemik, K., 2009. "Cost function estimates, scale economies and technological progress in the Turkish electricity generation sector," Energy Policy, Elsevier, vol. 37(1), pages 204-213, January.
    4. Ajayi, Victor & Weyman-Jones, Thomas & Glass, Anthony, 2017. "Cost efficiency and electricity market structure: A case study of OECD countries," Energy Economics, Elsevier, vol. 65(C), pages 283-291.
    5. Nauges, Celine & van den Berg, Caroline, 2007. "How"natural"are natural monopolies in the water supply and sewerage sector ? Case studies from developing and transition economies," Policy Research Working Paper Series 4137, The World Bank.
    6. Guerrini, Andrea & Romano, Giulia & Leardini, Chiara, 2018. "Economies of scale and density in the Italian water industry: A stochastic frontier approach," Utilities Policy, Elsevier, vol. 52(C), pages 103-111.
    7. Casarin, Ariel A., 2007. "Efficient industry configurations in downstream gas markets. An empirical assessment," Energy Economics, Elsevier, vol. 29(2), pages 312-328, March.
    8. Farsi, Mehdi & Filippini, Massimo & Kuenzle, Michael, 2007. "Cost efficiency in the Swiss gas distribution sector," Energy Economics, Elsevier, vol. 29(1), pages 64-78, January.
    9. Mohanty, Sunil K. & Lin, Winston T. & Lin, Hong-Jen, 2013. "Measuring cost efficiency in presence of heteroskedasticity: The case of the banking industry in Taiwan," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 26(C), pages 77-90.
    10. Torres, Marcelo & Morrison Paul, Catherine J., 2006. "Driving forces for consolidation or fragmentation of the US water utility industry: A cost function approach with endogenous output," Journal of Urban Economics, Elsevier, vol. 59(1), pages 104-120, January.
    11. Mehdi Farsi & Massimo Filippini & Michael Kuenzle, 2006. "Cost Efficiency in Regional Bus Companies: An Application of Alternative Stochastic Frontier Models," Journal of Transport Economics and Policy, University of Bath, vol. 40(1), pages 95-118, January.
    12. Germà Bel, 2013. "Local government size and efficiency in capital-intensive services: what evidence is there of economies of scale, density and scope?," Chapters, in: Santiago Lago-Peñas & Jorge Martinez-Vazquez (ed.), The Challenge of Local Government Size, chapter 6, pages 148-170, Edward Elgar Publishing.
    13. Céline Nauges & Caroline Berg, 2008. "Economies of density, scale and scope in the water supply and sewerage sector: a study of four developing and transition economies," Journal of Regulatory Economics, Springer, vol. 34(2), pages 144-163, October.
    14. Rodríguez-Álvarez, Ana & Tovar, Beatriz, 2012. "Have Spanish port sector reforms during the last two decades been successful? A cost frontier approach," Transport Policy, Elsevier, vol. 24(C), pages 73-82.
    15. Walheer, Barnabé, 2018. "Scale efficiency for multi-output cost minimizing producers: The case of the US electricity plants," Energy Economics, Elsevier, vol. 70(C), pages 26-36.
    16. Massimo Filippini & Nevenka Hrovatin & Jelena Zoric, 2010. "Productivity growth and price regulation of Slovenian water distribution utilities," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 28(1), pages 89-112.
    17. Brian Tavonga Mazorodze & Harris Maduku, 2024. "Does Education Help Local Economies Reach Economic Potential? Evidence from South Africa," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 10(1), pages 57-86, January.
    18. Massimo Filippini & Nevenka Hrovatin & Jelena Zorić, 2008. "Cost efficiency of Slovenian water distribution utilities: an application of stochastic frontier methods," Journal of Productivity Analysis, Springer, vol. 29(2), pages 169-182, April.
    19. Akkemik, K. Ali & Oğuz, Fuat, 2011. "Regulation, efficiency and equilibrium: A general equilibrium analysis of liberalization in the Turkish electricity market," Energy, Elsevier, vol. 36(5), pages 3282-3292.
    20. Bel, Germà & Warner, Mildred, 2008. "Does privatization of solid waste and water services reduce costs? A review of empirical studies," Resources, Conservation & Recycling, Elsevier, vol. 52(12), pages 1337-1348.

    More about this item

    Keywords

    Local monopoly; network effect; non-neutral stochastic frontier production function; technical efficiency; natural gas industry;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibf:gjbres:v:5:y:2011:i:1:p:55-63. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mercedes Jalbert (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.