Efficiency Gains in Croatia’s Electricity Distribution Centers Following Industry Structure Changes

This paper studies the impact of industry restructuring on the efficiency of 21 state-owned electricity distribution centers in the Republic of Croatia. In 2006, distribution centers were put under a separate state-owned company. In addition, large customers were granted the right to choose their own private suppliers. We specify an input-oriented BCC model for first stage of Data Envelopment Analysis (DEA) with operating costs as the input and total electricity sales, number of customers and network length as outputs. Using pooled data for the period from 2005 to 2013, we estimate the relative efficiency of the electricity distribution centers each year. In the second stage, we regress the efficiency scores on contextual variables to estimate their impact on efficiency scores and document about 2.8% annual productivity gains over the years following the regulatory changes.