Technical Inefficiency and Productive Decline in the U.S. Interstate Natural Gas Pipeline Industry Under the Natural Gas Policy Act

Firm-specific and temporal patterns of technical efficiency of the interstate natural gas transmission industry during the implementation of the Natural Gas Policy Act are estimated by two alternative methodologies. A new panel stochastic frontier systems estimator exploits the potential exogeneity...

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Bibliographic Details
Published in:Journal of productivity analysis 1992-06, Vol.3 (1/2), p.119-133
Main Authors: SICKLES, ROBIN C., STREITWIESER, MARY L.
Format: Article
Language:English
Subjects:
Air compressors
Industrial efficiency
Industrial gases
Industrial regulation
Natural gas
Natural gas distribution
Natural gas industry
Natural gas pipelines
Pipelines
Sickles
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Summary:Firm-specific and temporal patterns of technical efficiency of the interstate natural gas transmission industry during the implementation of the Natural Gas Policy Act are estimated by two alternative methodologies. A new panel stochastic frontier systems estimator exploits the potential exogeneity of certain regressors from firm effects. This allows for heterogeneity in slopes, as well as in intercepts. Patterns of technical efficiency based on the structural stochastic model are compared with those based on deterministic programming methods, data envelopment analysis. Concordant findings based on these alternative methodologies suggest a perversive pattern of declining technical efficiency in the industry during the period of phased in well-head price deregulation.
ISSN:0895-562X
1573-0441
DOI:10.1007/BF00158772