Local Monopoly, Network Effects and Technical Efficiency – Evidence from Taiwan’s Natural Gas Industry

Global Journal of Business Research, Vol. 5, No. 1, pp. 55-63, 2011

9 Pages Posted: 29 Jun 2011  

Ting-Kun Liu

Chaoyang University of Technology

Date Written: 2011

Abstract

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.

Keywords: Local monopoly, network effect, non-neutral stochastic frontier production function, technical efficiency, natural gas industry

JEL Classification: D42, L95, O30

Suggested Citation

Liu, Ting-Kun, Local Monopoly, Network Effects and Technical Efficiency – Evidence from Taiwan’s Natural Gas Industry (2011). Global Journal of Business Research, Vol. 5, No. 1, pp. 55-63, 2011. Available at SSRN: https://ssrn.com/abstract=1873501

Ting-Kun Liu (Contact Author)

Chaoyang University of Technology ( email )

No. 168, Jifong E. Rd., Wufong Township
Taichung County, Taiwan 41349
Taiwan

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