Technical Efficiency Improvements in the Portuguese Electricity Sector

Efficiency has long been an issue of concern in the electricity sector. Most existing studies relate technical efficiency in the electricity sector to policy or environmental factors. The impact of firm operation factors has rarely been discussed. We estimate Stochastic Frontier models using firm-level panel data from 2006 to 2019 in the Portuguese electricity sector, corresponding to the period of market liberalization. The evidence suggests that productive technical efficiency improves through time. Results on the inefficiency determinants suggest that it's possible to improve productive technical efficiency through encouraging investment in fixed assets, higher hourly wage and moderate working hours