Measuring the Efficiency in Energy Distribution Firms in LAC: A Service Provision and Financial Performance Approach

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Oct 2022
This study identifies and analyzes the evolution of efficiency in providing services and in the financial performance of the LAC electricity distribution companies between 2014-2020. In addition, it examines firms characteristics that might be related to efficiencies, such as quality of service, corporate governance, firm size, and ownership. This paper uses a twostep procedure. First, it considers the efficiency levels and the total factor productivity (TFP) changes using the Malmquist index and breaks down the total change by relying on a nonparametric data envelopment analysis (DEA) approach. The second stage focuses on the drivers of efficiency obtained in the first stage using the Tobit technique. The main results suggest
that there is no significant improvement in the levels of efficiency in the period analyzed in the energy distribution firms in LAC. When analyzing the heterogeneity of a company's efficiency, the evidence shows a relation between companies efficiency and the quality perceived by users,
higher efficiency is related to better-perceived quality. Besides, companies characteristics, such as firm size, corporate governance, and ownership, are related to the heterogeneity of efficiency.