[1] In the context of the restructuring of the water industry, this work examines the treatment processes of urban wastewaters in Italy, with reference to costs, size, and technology. The operating cost function of 103 plants confirms scope economies from vertical integration and strong economies of scale for the smaller structure, confirming the benefits coming from the aggregation of the existing little firms. A minimum efficient size at about 100,000 inhabitants, however, inhibits the creation of large monopolies at a local level and enables the maintenance of indirect competition. Among the explanatory variables of running costs, the pollution load of the input wastewater takes on a high statistical significance and suggests environmental prevention, while the strong impact of sludge concentration means it should be considered in the new tariff systems. The recent introduction of advanced treatments is expensive, but the costs are balanced by a notable improvement in the pureness of the effluent waters. As for general environmental policies, it is necessary to find a good compromise between the need to improve the effectiveness of the existing plants and the investments in areas where the water treatment service is still inexistent.INDEX TERMS: 6344 Policy Sciences: System operation and management; 6324 Policy Sciences: Legislation and regulations; 6334 Policy Sciences: Regional planning; 6339 Policy Sciences: System design; KEYWORDS: wastewater, pollution-treatment, operating costs, scale economies Citation: Fraquelli, G., and R. Giandrone, Reforming the wastewater treatment sector in Italy: Implications of plant size, structure, and scale economies, Water Resour.
This paper proposes an empirical study of the Italian gas distribution industry by means of long‐term cost function. The analysis highlights the fact that the number of customers is more important than the amount of gas delivered in explaining the variability of distribution costs. Very low economies of scale, high economies of density, and the significant role of the morphologic and demographic variables characterize the nature of the technology. Better performance for private operators indicates that the privatization process should continue and the low degree of economies of scale confirms the benefits of having many operators (yardstick competition). Copyright © 2000 John Wiley & Sons, Ltd.
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