MALMQUIST INDEXES OF PRODUCTIVITY CHANGE IN THE UK GAS-INDUSTRY BEFORE AND AFTER PRIVATIZATION

The UK Government's privatization programme was justified in terms of potential efficiency gains. This paper concentrates on measures of tec hnical efficiency in the regions of the UK natural gas industry before and after privatization and the associated regulatory changes. It use s non-parametric frontier analysis and Malmquist indices to show that the rate of productivity growth increased significantly after privatiz ation. However the differences in technical efficiency amongst regions remain, suggesting that failure to break up the industry has sacrific ed potential gains from direct competition or indirect competition thr ough yardstick regulation.