NDLI: Ownership, Scale Economies and Efficiency in the Italian Water Sector

Content Provider	Springer Nature Link
Author	Cosmo, Valeria
Copyright Year	2012
Abstract	The Italian water sector is characterized by the presence of several water companies, with different ownership types; Fabbri and Fraquelli (Empirica 27:65–82, 2000) and Antonioli and Filippini (Util Policy 10:181–187, 2001) have analyzed the presence of economies of scale and scope in the sector while Abrate et al. (Journal of Productivity Analysis 35:227–242, 2011) have assessed the role of the heterogeneity in this sector. In recent years, the Italian water sector has been subject to a large reorganization, following the implementation of the EC Directive 60/00 for the harmonization of the pricing rules and polluting principles of the Member States. However, the reorganization of the sector is far from being accomplished, and the Italian water companies still face strong regulatory uncertainty associated with the absence of an independent authority. The lack of clear regulatory principles and the presence of almost 100 different companies managed differently across the territory requires the re-analysis of the possible sources of inefficiencies, in order to understand what kind of policy measures might be implemented to improve the performance of the water utilities and take them into account when the final tariff is fixed. This paper estimates a stochastic frontier to empirically investigate the main sources of inefficiency for a sample of 65 Italian water companies. First, this paper investigates whether a positive relationship exists between the firm’s ownership type and efficiency by using different estimation methods; second, this paper investigates whether the presence of economies of scale in the Italian water sector still exist after the merging process that recently took place as part of the sector reorganization. The estimation results show that ownership is not related to the firm’s performance and that the Italian water sector is still characterized by the presence of economies of scale. This result indicates that local communities may benefit from merging into larger water districts.
Starting Page	399
Ending Page	415
Page Count	17
File Format	PDF
ISSN	15661679
Journal	Journal of Industry, Competition and Trade
Volume Number	13
Issue Number	3
e-ISSN	15737012
Language	English
Publisher	Springer US
Publisher Date	2012-06-07
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	water sector scale economies cost efficiency stochastic frontiers Industrial Organization Economic Policy R & D/Technology Policy Microeconomics European Integration
Content Type	Text
Resource Type	Article
Subject	Economics and Econometrics Industrial Relations

Sl.	Authority	Responsibilities	Communication Details
1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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