Nick, Sebastian and Wetzel, Heike (2016). The hidden cost of investment: the impact of adjustment costs on firm performance measurement and regulation. J. Regul. Econ., 49 (1). S. 33 - 56. DORDRECHT: SPRINGER. ISSN 1573-0468
Full text not available from this repository.Abstract
In this study, we address a major problem in the measurement of firm performance and the regulation of natural monopolies, namely the intertemporal character of long-term investment decisions. Specifically, we focus on the impact of adjustment costs of investments on estimates of firms' technical and cost inefficiency. We make use of a nonparametric dynamic data envelopment analysis to investigate the dynamic inefficiency of electricity distribution and transmission companies in the US during the years 2004-2011. These results are compared to their static counterparts. Our empirical findings reveal that ignoring long-term investments and their corresponding adjustment costs significantly distorts both firm-specific and industrial inefficiency estimates and may thus create misleading incentives for the regulated firms to cut investments.
Item Type: | Journal Article | ||||||||||||
Creators: |
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URN: | urn:nbn:de:hbz:38-286511 | ||||||||||||
DOI: | 10.1007/s11149-015-9285-z | ||||||||||||
Journal or Publication Title: | J. Regul. Econ. | ||||||||||||
Volume: | 49 | ||||||||||||
Number: | 1 | ||||||||||||
Page Range: | S. 33 - 56 | ||||||||||||
Date: | 2016 | ||||||||||||
Publisher: | SPRINGER | ||||||||||||
Place of Publication: | DORDRECHT | ||||||||||||
ISSN: | 1573-0468 | ||||||||||||
Language: | English | ||||||||||||
Faculty: | Unspecified | ||||||||||||
Divisions: | Unspecified | ||||||||||||
Subjects: | no entry | ||||||||||||
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Refereed: | Yes | ||||||||||||
URI: | http://kups.ub.uni-koeln.de/id/eprint/28651 |
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