Measuring Cost Efficiency in the Brazilian Electricity Distribution Sector
The objective of the this work is to verify the applicability of parametric methods that measure the cost efficiency of Brazilian electricity distributors. We estimate total cost functions, derived from a Cobb-Douglas production function. The frontier cost model is estimated using GLS (Variance Components – Random Effects) and pooled least square (Fixed Effects) methods. We apply these methods to a sample of 25 Brazilian power distribution companies over a period of 12 years, from 1990 through 2001. The results indicate that in the period studied all the companies were equally efficient in controlling their costs.