Specification and estimation of the effect of ownership on the economic efficiency of the water utilities

Bhattacharyya, Arunava; Harris, Thomas R.; Narayanan, Rangesan; Raffiee, Kambiz

doi:10.1016/0166-0462(95)02107-8

Cited by 144 publications

(80 citation statements)

References 35 publications

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“…unequivocally the superiority of one regime of ownership over the other, or to affirm that privatisation leads to efficiency improvements. Without aiming to be exhaustive, some papers have found empirical evidence supporting better performance on the part of public utilities (Bruggink, 1982;Lambert et al, 1993;Bhattacharyya et al, 1994Bhattacharyya et al, , 1995a, while other authors consider that privately owned water utilities outperform public utilities (Morgan, 1977;Crain and Zardkoohi, 1978;Bhattacharyya et al, 1995b).…”

Section: Insert Tables 3 4 and 5 About Herementioning

confidence: 99%

The role of environmental factors in water utilities’ technical efficiency. Empirical evidence from Spanish companies

2009

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Section: Insert Tables 3 4 and 5 About Herementioning

confidence: 99%

The role of environmental factors in water utilities’ technical efficiency. Empirical evidence from Spanish companies

2009

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“…Some scholars also found that the relationship between ownership and efficiency may be moderated by a number of factors, i.e., the output amount and size of operations (henceforth, scale economies) [14], or the regulatory regime of the waters supply industry [15]. The weight of these factors on efficiency may be even more important than ownership, and to achieve an acceptable efficiency rate an appropriate combination of incentives, governance mechanisms and penalties is necessary [16].…”

Section: Private Vs Public Ownership And/or Management Of Water Provmentioning

confidence: 99%

Are Public-Private Partnerships a Source of Greater Efficiency in Water Supply? Results of a Non-Parametric Performance Analysis Relating to the Italian Industry

Storto

2013

Water

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This article reports the outcome of a performance study of the water service provision industry in Italy. The study evaluates the efficiency of 21 "private or public-private" equity and 32 "public" equity water service operators and investigates controlling factors. In particular, the influence that the operator typology and service management nature -private vs. public -has on efficiency is assessed. The study employed a two-stage Data Envelopment Analysis methodology. In the first stage, the operational efficiency of water supply operators is calculated by implementing a conventional BCC DEA model, that uses both physical infrastructure and financial input and output variables to explore economies of scale. In the second stage, bootstrapped DEA and Tobit regression are performed to estimate the influence that a number of environmental factors have on water supplier efficiency. The results show that the integrated water provision industry in Italy is characterized by operational inefficiencies of service operators, and scale and agglomeration economies may have a not negligible effect on efficiency. In addition, the operator typology and its geographical location affect efficiency.

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“…Due to excluded variables such as number of customers and area size, the obtained results may be biased. Bhattacharyya et al (1995) uses a stochastic frontier cost function to specify the costs and inefficiency of 221 publicly and privately owned urban water utilities operating in the US in 1992. A translog functional form is employed to estimate variable cost function.…”

Section: Review Of the Relevant Studiesmentioning

confidence: 99%

Cost efficiency of Slovenian water distribution utilities: an application of stochastic frontier methods

2007

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This study estimates cost inefficiency and economies of scale of Slovenian water distribution utilities over the 1997-2003 period by employing several different stochastic frontier methods. The results indicate that significant cost inefficiencies are present in the utilities. An introduction of incentive-based price regulation scheme might help resolve this problem. However, the inefficiency scores obtained from different cost frontier models are not found to be robust. The levels of inefficiency estimates as well as the rankings depend on the econometric specification of the model. The established lack of robustness can be at least partly explained by different ability of the models to separate unobserved heterogeneity from inefficiency. Newly proposed true fixed effects model (Greene, 2005a, b) appears to perform better than the conventional panel data models with respect to distinguishing between unobserved heterogeneity and inefficiency. On the other hand, different models produce fairly robust results with respect to estimates of economies of output density, customer density and economies of scale. The optimal size of a company is found to closely corresponds to the sample median. Economies of scale are found in small-sized utilities, while large companies exhibit diseconomies of scale.

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Specification and estimation of the effect of ownership on the economic efficiency of the water utilities

Cited by 144 publications

References 35 publications

The role of environmental factors in water utilities’ technical efficiency. Empirical evidence from Spanish companies

The role of environmental factors in water utilities’ technical efficiency. Empirical evidence from Spanish companies

Are Public-Private Partnerships a Source of Greater Efficiency in Water Supply? Results of a Non-Parametric Performance Analysis Relating to the Italian Industry

Cost efficiency of Slovenian water distribution utilities: an application of stochastic frontier methods

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