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Measuring Productivity Gains from Deregulation of the Japanese Urban Gas Industry

The Japanese government initiated a series of regulatory reforms in the mid-1990s. The Japanese urban gas industry consists of various sized private and non-private firms. Numerous previous studies find that deregulation leads to productivity improvements. We extend the literature by analyzing deregulation, privatization, and other aspects of a regulated industry using unique firm level data. This study measures productivity to evaluate the effect of the deregulation reform. Using data from 205 firms from 1993 to 2004, we find that the deregulation effect differs depending on firm size. Competitive pressure contributes to advanced productivity. The deregulation of gas sales to commercial customers is the most important factor for advancing productivity.

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Energy Specializations: Natural Gas – Local Distribution; Natural Gas – Markets and Prices; Natural Gas – Policy and Regulation; Electricity – Policy and Regulation

JEL Codes:
L95 - Gas Utilities; Pipelines; Water Utilities
L13 - Oligopoly and Other Imperfect Markets
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General

Keywords: Productivity analysis, Deregulation reform, Gas industry, Proportional distance function, Natural gas

DOI: 10.5547/01956574.34.4.9

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Published in Volume 34, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.