In this study we combine different possibilities to model firm level heterogeneity in Stochastic Frontier Analysis. We show that both observed and unobserved heterogeneity cause serious biases in inefficiency results if left unmodelled. Modelling observed and unobserved heterogeneity treats...

This research evaluates the effects of benchmarking technique by using Australian experience, providing empirical support to the significance of mechanism design in implementing revenue cap regulation. We estimate efficiency and productivity of Australian distribution electricity network service...

Regulator needs reliable information on which to base its policies when practicing regulation on individual firms. Various benchmarking methods can be used to evaluate the firm specific effectiveness on the industry. In this paper we study the sensitivity problems of the benchmarking processes...