Abstract
This study compares the electric power sectors between Japan and South (S) Korea. Both nations have been under a global trend of deregulation. To assess their progress due to industrial change and technology development, we use Data Envelopment Analysis (DEA) as an assessment tool that enables us to evaluate the level of simultaneous achievements on economic and technological measures, so assessing the degree of holistic development. DEA has been widely applied for performance assessment in the past decades. In this study, the method compares electric power firms by their operational efficiencies. To compare their achievements, it is necessary to develop a new type of DEA application for performance measurement. The proposed approach adds two analytical capabilities. First, the approach needs to handle “zero” in a data set and then restrict multipliers (i.e., weights among inputs and outputs) without any prior information to increase our empirical reliability. No study has simultaneously explored the two capabilities in DEA. Using the proposed method, our empirical study identifies two findings. One of the two is that the electric power industry of S. Korea outperformed that of the Japanese industry in the observed periods (2014–2018) because the Japanese power sector still suffered from an occurrence of the Fukushima Daiichi nuclear plant disaster which occurred on 1 March 2011. However, the difference has been gradually diminishing because the Japanese electricity industry has been gradually recovering from the huge disaster. The other is that the S. Korean power industry has been in a descending trend because the nation has shown technical regress as a result of inconsistent technology development (e.g., shifting its R&D: Research and Development) focus from electrical engineering to chemistry). The former R&D area is essential in maintaining the technical level of S. Korea′s electric power industry.
Highlights
In regulated markets, electricity firms often hold control over a complete process, from generation all the way down to end-users
While there is a great body of Data Envelopment Analysis (DEA) applications in many countries (e.g., [6] in Australia and [7] in China), this study focuses on comparing Japanese with S
This study looked into Japanese fuel mix strategy based on the DEA performance evaluations of 33 OECD countries
Summary
Electricity firms often hold control over a complete process, from generation all the way down to end-users. Electricity deregulation takes some of the ownership/operation away from the electric power process under vertically-integrated structures. In deregulated markets, they may control part of the generation, distribution, maintenance of wires and poles, and invoicing of consumers for those services. Some expected benefits of the deregulation include (a) improved energy technologies, (b) lower rates, (c) additional energy options, (d) advanced customer service, and (e) economic growth. The deregulation in the electric power industry is a world-wide. Energies 2020, 13, 3968 trend, because we may expect many benefits due to the deregulation. Both Japan and South (S) Korea belong to the global trend of deregulation
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