Measuring the Efficiency of Turkish Natural Gas Distribution Companies Using Stochastic Frontier Analysis

Natural gas should be distributed and consumed optimally in a given country since it is an important intermediate good for producers and a necessary final good for households with a low-income elasticity. Thus, this study aims to measure the efficiency of natural gas distribution companies responsible for delivering natural gas to economic units. The efficiency of 63 natural gas distribution companies operating in Turkey is estimated by the Stochastic Frontier Analysis method for 2013-2018. According to the findings, it is found that no firm operates within full efficiency. It is also concluded that while Bursa Natural Gas Distribution firm has the highest efficiency, Aksa Canakkale Natural Gas Distribution firm has the lowest efficiency for the period studied. The findings show that inefficiency mainly stems from technical inefficiency rather than measurement errors and that natural gas distribution firms experience increasing returns to scale