This Study Aims To Evaluate The Efficiency And Productivity

1439 WordsJan 7, 20176 Pages
This study aims to evaluate the efficiency and productivity change of 39 electricity distribution companies in Iran over the period 2005–14. A nonparametric data envelopment analysis (DEA) model is used to estimate the relative technical efficiency and productivity change of these companies. In addition, the distribution of efficiency based on geographic classification, size, and the type of the company, city, or province, is assessed. A stability test is also conducted in order to verify the robustness of the proposed model. Results demonstrate that the average technical efficiency of companies increased during the years 2006–09 but decreased during 2010–14. Moreover, the low increase of productivity change is more due to low efficiency…show more content…
In addition, Iran classified its provinces into five regions. Analyzing the efficiency of distribution companies across these regions is very significant for understanding the utilization of scarce resources. Data envelopment analysis (DEA) is a mathematical programming method for assessing the comparative efficiencies of decision-making units (DMUs). This methodology is a nonparametric approach to determining a linear efficiency frontier along the most efficient utilities, to derive the relative efficiency measures of all other utilities [3]. The main advantage of DEA is that it can handle relatively easily a multi-output and multi-input environment without specifying any functional form of the production relationship [4]. DEA is attractive and most popular in estimating efficiency and productivity change in electricity distribution companies because they produce several outputs with several inputs. The purpose of this paper is to analyze the evolution in the efficiency and productivity of Iran’s electricity distribution companies with the use of DEA. The innovative content of the paper is, for the first time, to apply DEA to these companies, and analyze them based on geographic classification, size, and the type of the companies, city, or province. In addition, a stability test is conducted and productivity changes are estimated. Finally, we hope that the results of this study can be regarded as a resource for
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