Overcoming Data Limitations in Nonparametric Benchmarking: Applying PCA-DEA to Natural Gas Transmission

Maria Nieswand; Astrid Cullmann; Anne Neumann

doi:10.2202/1446-9022.1209

Publicly Available Published by De Gruyter June 1, 2010

Overcoming Data Limitations in Nonparametric Benchmarking: Applying PCA-DEA to Natural Gas Transmission

Maria Nieswand , Astrid Cullmann and Anne Neumann

From the journal Review of Network Economics

https://doi.org/10.2202/1446-9022.1209

We empirically demonstrate a practical approach of efficiency evaluation with limited data availability in some regulated industries. We apply PCA-DEA for radial efficiency measurement to U.S. natural gas transmission companies in 2007. PCA-DEA reduces dimensions of the optimization problem while maintaining most of the variation in the original data. Our results suggest that the methodology reduces the probability of over-estimation of individual firm-specific performance.

Keywords: efficiency analysis; PCA-DEA; network regulation; natural gas transmission

Published Online: 2010-6-1

Overcoming Data Limitations in Nonparametric Benchmarking: Applying PCA-DEA to Natural Gas Transmission

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