Performance assessment of Iranian electricity distribution companies by an integrated cooperative game data envelopment analysis principal component analysis approach

This paper introduces an integrated approach to evaluate efficiency of electricity distribution companies. It combines bargaining game theory, principal component analysis (PCA) and data envelopment analysis (DEA) to obtain more realistic results with higher resolution power. In real world case studies, classical DEA models often identify too many decision making units (DMUs) as efficient. It also occurs when the number of DMUs under evaluation are not large enough compared with the total number of inputs and outputs. To overcome this problem and reduce the number of the variables, PCA technique is combined with the conventional DEA model. Then, the bargaining game model is combined with the PCA-DEA model in order to discriminate among the DMUs. To illustrate the performance of the proposed approach, thirty-seven Iranian electricity distribution companies are evaluated. The results indicate the abilities of the proposed approach to evaluate the DMUS in a competitive environment.