Technical Change and Efficiency Measures: The Post-privatisation in the Gas Distribution Sector in Argentina

In this paper we use a stochastic frontier approach to analyse the technical change in the post-privatisation period in the gas distribution sector in Argentina. We found that there are both a catching up effect and a shift in the frontier that are showing that the sector as a whole improved its efficiency in the reviewed period. Moreover, this phenomenon holds not only for the average but also for every firm in the sample.stochastic frontier; post-privatisation; efficiency

Efficiency Measures and Regulation: An Illustration of the Gas Distribution Sector in Argentina

The paper develops a cost frontier model of gas distribution and estimates it on data for gas distribution companies of Argentina. Efficiency measures are an important tool for regulators, showing how much a firm can rise its output without using more inputs. In Argentina, the Regulatory Framework of the gas sector establishes that only firms that are efficient can earn a rate of return similar to those activities that bear comparable risk. In this context, the estimate of efficiency measures is an indispensable tool to improve regulation of the privatised utilities. The first part of the paper consists in a theoretical survey of the existent literature where we discuss recent developments in this field, paying special attention to the case of regulated utilities. Deterministic and stochastic cost frontiers are analysed, both for the cases of cross-section and panel data. In the second part, we use econometrics methods to estimate a cost frontier (deterministic and stochastic) for the gas distribution sector in Argentina. Finally, the efficiency rankings of the companies are estimated.Efficiency Measures; Gas Distribution Sector in Argentina

El impacto de la privatización del sector eléctrico en la salud pública

Este informe utiliza información a nivel provincial en Argentina para probar la relación casual entre la distribución de electricidad y la salud. Examina el impacto de la privatización en dos medidas: incidencia en los índices de nacimientos de bajo peso y mortalidad infantil causada por envenenamiento de comida. La privatizacion mejora la cobertura del servicio que, a través del uso de refrigeradoras puede mejorar la ración nutricional. La privatización también tiene por resultado la reducción en la frecuencia de interrupciones eléctricas, y así reducir la probabilidad del envenenamiento de la comida. A pesar que la evidencia indica que la privatización reduce el índice de nacimientos de bajo peso y mortalidad infantil causados por el envenenamiento de la comida, los resultados no son lo suficientemente fuertes para enriquecer el debate de políticasrespecto a los beneficios de la privatización para el bienestar de los pobres.

Technical Change and Catching-up: The Electricity Distribution Sector in South America

The main purpose of this paper is to analyze technical change in the electricity distribution sector in South America, in the period 1994-1997. We do so by estimating a Maximum Likelihood stochastic frontier. We found that there is no evidence of catching up effects in the sector during this period. Besides, there is partial evidence that suggests that countries which reformed their electricity sector had a better performance than those which did not. We also found an increase in the capital share in the countries that made the reform and an increment in the labor share in the ones that did not make the reform.Technical change; Catching-Up; Stochastic frontier

Consistency Conditions: Efficiency Measures for the Electricity Distribution Sector in South America

The main goals of this paper are basically two: to compare the relative efficiency of the firms in the electricity distribution sector in South America, and to perform a consistency analysis on the different approaches usually used to measure efficiency. The estimated model considers a single output (customers) and six variables standing for inputs and environmental characteristics (service area, sales, market structure, mains kilometres of distribution, number of employees and transformer capacity). Information on these variables comes from the CIER database for the accounting year ending in 1994. This model is in line with the previous literature on the subject. It has been found that, in general, the consistency conditions are met.Consistency Conditions; Efficiency Measures; Electricity Distribution Sector

Measuring Inefficiency in Public Utilities: Does the Distribution Matter?

In this paper we describe two of the most used distributions for the inefficiency term in a stochastic frontier: the Half Normal and the Exponential distributions. We then show that both distributions affect the skewness of the composite error term in different ways, which make the Exponential distribution more inclined to identifying a larger number of efficient firms. In order to check these results we perform MOLS and ML, using four databases already used in previous work. We find that the mean efficiency is sensitive to the assumed distribution. In all cases we corroborate that the Exponential distribution identifies a larger number of efficient firms than the Half Normal, as the theory predicted. However, the rankings of firms by efficiency scores were not affected by the choice of distribution.stochastic frontier; efficiency; distribution

The Cost of Capital in Regulated Firms: The Argentine Experience

The sustainability of service is one of the fundamental aims of any regulatory system, and this tends to be reflected in the general principles within the legal framework of each public service. The necessity to cover economic costs of service then follows, in order to cover costs in such a way as to guarantee the maintaining and continuity of the system as well as its expansion. These economic costs should necessarily include sufficient retribution for the capital used by investors: the cost of capital. In the case of Argentine regulation, it is usual practice to use an adapted form of the CAPM (Capital Asset Pricing Model) to calculate the opportunity cost of equity, in such a way as to take the country risk into account. In this work we will analyse the components of the adapted formula for the cost of capital, discussing incentives which generate each of the possible outcomes for the regulated firms. Finally, we will present a model of dynamic optimisation for a regulated firm in a country such as Argentina.regulatory system; public service; CAPM; country risk

Reducing the Asymmetry of Information Through the comparison of the Relative Efficiency of Several Regional Monopolies

Following the process initiated by Chile in the early 1980s, most countries in South America have undergone deep transformations in their electric industries. In this new playing field, the comparison of the relative efficiency of several regional monopolies seems to be a potentially valuable tool to reduce the asymmetry of information that is involved in the regulator-firm relationship. However, to be useful in the regulatory process, productive frontier estimates require a broad set of comparable firms and detailed information about them. This availability of data, although a necessary condition, is far from sufficient. One must also count on adequate techniques. In this paper we carry out an efficiency analysis in the electricity distribution sector in South America using different techniques, stating the conditions under which they become a useful tool in crafting an efficient regulation of the firms in that sector. Despite the particular results found here, the paper underscores the importance of conducting a consistency analysis whenever using efficiency measures in applied regulation.electric industries; efficiency; regional monopolies; asymmetry of information

Conscription and Crime: Evidence from the Argentine Draft Lottery

We estimate the causal effect of mandatory participation in the military service on the involvement in criminal activities. We exploit the random assignment of young men to military service in Argentina through a draft lottery to identify this causal effect. Using a unique set of administrative data that includes draft eligibility, participation in the military service, and criminal records, we find that participation in the military service increases the likelihood of developing a criminal record in adulthood. The effects are not only significant for the cohorts that performed military service during war times, but also for those that provided service at peace times. We also find that military service has detrimental effects on future performance in the labor market.Military Service, Violent behavior, Crime

Análisis de eficiencia aplicado a la regulación ¿Es importante la Distribución Elegida para el Término de Ineficiencia?

En este trabajo se describen las dos distribuciones más utilizadas para el término de ineficiencia de una frontera estocástica: Media Normal y Exponencial. Luego se realiza una aplicación empírica empleando bases de trabajos previos, encontrándose que la eficiencia media es sensible a la distribución asumida. Se halló que en todos los casos la distribución Exponencial reconoce un mayor número de empresas eficientes que la distribución Media Normal. No obstante, los rankings de las firmas no se ven afectados por ambas distribuciones.frontera estocástica; eficiencia