The efficiency of conventional fuel power plants in South Korea: A comparison of parametric and non-parametric approaches

The efficiencies of the 64 conventional fuel power plants operating in South Korea were determined by data envelopment analysis (DEA) approaches, as well as by a stochastic-frontier method. The Banker, Charnes and Cooper (BCC) DEA efficiencies were introduced into an econometric estimate of a standard production function model, leading to a corrected factors version of the model, with significant improvement of the statistical explanation of our data. A statistical analysis of the DEA efficiencies was carried out, and these were compared to efficiencies revealed by a stochastic-frontier method.