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Measuring Potential Gains from Mergers among Electricity Distribution Companies in Turkey using a Non-Parametric Model

Author

Listed:
  • Necmiddin Bagdadioglu

    (Department of Public Finance, Hacettepe University and Centre for Competition Policy, University of East Anglia)

  • Catherine Waddams Price

    (Centre for Competition Policy, University of East Anglia)

  • Thomas Weyman-Jones

    (Department of Economics, Loughborough University)

Abstract

Turkish electricity reform is entering a new phase through the Turkish Government's proposal to create 21 new distribution companies, 18 of them through merger. Two aspects of merger analysis are the operational cost savings and the potential production efficiency gains. This paper concentrates on the second aspect and uses a recently developed methodology to assess the potential effect of these mergers and whether these mergers are efficiency enhancing. This is performed by comparing the actual efficiency levels of observed distribution companies with the merger of proposed aggregated companies. The model is calibrated on panel data from 1999 to 2003 which include measures of physical capital and labour inputs, as well as customer and energy related outputs. The results indicate potential for considerable efficiency gains from the proposed mergers.

Suggested Citation

  • Necmiddin Bagdadioglu & Catherine Waddams Price & Thomas Weyman-Jones, 2006. "Measuring Potential Gains from Mergers among Electricity Distribution Companies in Turkey using a Non-Parametric Model," Working Papers 06-13, Centre for Competition Policy, University of East Anglia.
    • Handle: RePEc:ccp:wpaper:wp06-13
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    File URL: http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP06-13.pdf
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    More about this item

    Keywords

    Efficiency and productivity analysis; data envelopment analysis; electricity distribution;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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