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Overcoming Data Limitations in Nonparametric Benchmarking: Applying PCA-DEA to Natural Gas Transmission

Author

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  • Nieswand, Maria
  • Cullmann, Astrid
  • Neumann, Anne

Abstract

We empirically demonstrate a practical approach of efficiency evaluation with limited data availability in some regulated industries. We apply PCA-DEA for radial efficiency measurement to U.S. natural gas transmission companies in 2007. PCA-DEA reduces dimensions of the optimization problem while maintaining most of the variation in the original data. Our results suggest that the methodology reduces the probability of over-estimation of individual firm-specific performance.

Suggested Citation

  • Nieswand, Maria & Cullmann, Astrid & Neumann, Anne, 2010. "Overcoming Data Limitations in Nonparametric Benchmarking: Applying PCA-DEA to Natural Gas Transmission," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 9(2).
    • Handle: RePEc:zbw:espost:167594
    DOI: 10.2202/1446-9022.1209
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    Cited by:

    1. Ajayi, V. & Pollitt, M., 2022. "Changing times: Incentive regulation, corporate reorganisations, and productivity in the Great Britain’s gas networks," Cambridge Working Papers in Economics 2254, Faculty of Economics, University of Cambridge.
    2. Victor Ajayi & Michael G. Pollitt, 2022. "Changing times: Incentive regulation, corporate reorganisations, and productivity in Great Britain’s gas networks," Working Papers EPRG2214, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    3. Maria Nieswand & Matthias Walter, 2010. "Cost Efficiency and Subsidization in German Local Public Bus Transit," Discussion Papers of DIW Berlin 1071, DIW Berlin, German Institute for Economic Research.
    4. Corrado Lo Storto, 2018. "A Nonparametric Economic Analysis of the US Natural Gas Transmission Infrastructure: Efficiency, Trade-Offs and Emerging Industry Configurations," Energies, MDPI, vol. 11(3), pages 1-24, February.

    More about this item

    Keywords

    Efficiency Analysis; PCA-DEA; Network Regulation; Natural Gas Transmission;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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