Resumen de Production efficiency measurement of ten Japanese electric power companies: An application of the stochastic frontier model
Insang Hwang, Trang Lam Thuy Vo
The objective of this study is to investigate the technical efficiency of ten Japanese electric power companies for the period 1996-2007.
We find that nuclear and hydropower generation increases technical efficiency significantly more than other types of power generation.
Furthermore, the technological progress of the ten companies is a positive, significant, and neutral one. The ten power companies show a considerable fluctuation in their production efficiency during the sample period. Whereas Tokyo's technical efficiency was lowered because of less use of nuclear plants, Kansai has demonstrated leadership on technical efficiency during this period. Chubu and Kyushu remarkably have caught up with the technical leader's efficiency level in response to the large market demand, their efficient mixture of different types of generation, and their high degree of technology utilization rate. Overall, we conclude that there are no scale economies in Japanese electricity generation. Thus, we recommend a separation policy between generation and other functions of electricity companies.
