Gas Distribution in Italy: A Non Parametric Analysis of Companies Operational Efficiency

This paper investigates the levels of technical efficiency in the distribution segment of the natural gas industry in Italy. An empirical analysis is conducted on a sample of 32 gas distributors, while Data Envelopment Analysis (DEA) is performed to calculate efficiency scores. Technical and scale efficiency, and density measurements are also used. Results show that the sample average technical efficiency is about at 75.58%, with a standard deviation of 31.24%. Scale economies are also relevant in the industry as scale efficiency is only 49.28%, with the bulk of companies showing decreasing returns to scale. Furthermore, from graphical analysis apparently no association between technical, scale efficiency and density measurements emerges, indicating that there is no one optimal way to improve efficiency of gas distributing companies.