Measuring potential gains from mergers among electricity distribution companies in Turkey using a non-parametric model

Creative Commons License

Bagdadioglu N., Price C. W., Weyman-Jones T.

ENERGY JOURNAL, vol.28, no.2, pp.83-110, 2007 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 28 Issue: 2
  • Publication Date: 2007
  • Doi Number: 10.5547/issn0195-6574-ej-vol28-no2-4
  • Journal Name: ENERGY JOURNAL
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.83-110
  • Hacettepe University Affiliated: No


Turkish electricity reform is entering a new phase through the Turkish Government's proposal to create 21 new distribution companies, 18 of them by merger. Two aspects of merger analysis are the operational cost savings and the potential production efficiency gains. This paper concentrates on the second aspect and uses a recently developed methodology to assess the potential effect of these mergers and whether these mergers are efficiency enhancing. This is performed by comparing the actual efficiency levels of observed distribution companies with the merger of proposed aggregated companies. The model is calibrated on panel data from 1999 to 2003 which include measures of physical capital and labor inputs, as well as customer and energy related outputs. The results indicate potential for considerable efficiency gains from the proposed mergers.