Cost functions and cost efficiency in electricity distribution: a stochastic frontier approach

Article Abstract:

A cost frontier model of electricity distribution is estimated on data for the 12 regional electric utilities of England and Wales. Results underscore the disadvantages of cross-section estimation, since the insignificance of some significant cost drivers in cross-section estimation were revealed to be insignificant. Results instead favor the random-effects panel data model as more discriminating as it rejected variables that were significant in the cross-section model. Significant cost drivers in the panel data model appears to be the number of customers, maximum demand and factor prices, thus revealing important implications for the price cap.

Electric services, Electric Power Distribution, Models, Electric utilities, Finance, Cost (Economics), Costs (Economics)

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A note on a unified approach to asymptotic equivalence of Aitken and feasible Aitken instrumental variables estimators

Article Abstract:

A research paper on instrumental variables which was published in the International Economic Review is discussed. The limitation of the application of a theorem and an assumption used in its formulation is discussed. It was shown that the theorem can not be used even for simple equation models containing stochastic regressors. Thus, the theorem is limited in application to equation models with nonstochastic regressors used as instruments.

Research, Analysis, Stochastic analysis, Asymptotic efficiencies (Statistics), Instrumental variables (Statistics), Instrumental variables

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Is more information a good thing? Bias nonmonotonicity in stochastic difference equations

Article Abstract:

The bias of estimate parameters in autoregressive models is shown to increase as the sample size grows.

Usage, Autoregression (Statistics)

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