Local Monopoly, Network Effects and Technical Efficiency – Evidence from Taiwan’s Natural Gas Industry
Chaoyang University of Technology
Global Journal of Business Research, Vol. 5, No. 1, pp. 55-63, 2011
This paper examines the optimal number of natural gas firms in each region of Taiwan. In order to separate large local monopoly companies from the small ones, this paper constructs a firm-level panel data analysis for the industry covering the period 1995-1999. The optimal number of firms in each region is estimated by using the minimum efficient scale theory. In addition, a non-neutral stochastic frontier production function is used to detect the impact of the local monopoly, the network effects and cost structure on the natural gas firms’ technical efficiency.
Number of Pages in PDF File: 9
Keywords: Local monopoly, network effect, non-neutral stochastic frontier production function, technical efficiency, natural gas industry
JEL Classification: D42, L95, O30
Date posted: June 29, 2011