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Firm-level inefficiency and its determinants in the Swedish water and wastewater sector

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  • Magnus Soderberg

Abstract

The Swedish Water and Wastewater (WW) utilities are subject to a cost-of-service regulation with no regulatory incentives to reduce costs. An estimation of firm-level inefficiency using stochastic frontier models on a cross-sectional sample of 148 utilities from 2006 suggests that overall the sector has at least a 15% cost reduction potential. Utilities can increase efficiency by reducing network losses. The cost frontier shifts to a higher level when (1) two or more municipalities merge their WW operations and when (2) utilities receive tax subsidies.

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  • Magnus Soderberg, 2011. "Firm-level inefficiency and its determinants in the Swedish water and wastewater sector," Applied Economics Letters, Taylor & Francis Journals, vol. 18(12), pages 1149-1153.
    • Handle: RePEc:taf:apeclt:v:18:y:2011:i:12:p:1149-1153
    DOI: 10.1080/13504851.2010.528349
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    1. Söderberg, Magnus & Sundriyal, Vivek & Gabrielsson, Johan, 2023. "The Impact of population size and bin structure on the cost of municipal solid waste: evidence from Sweden and Norway," Ratio Working Papers 367, The Ratio Institute.
    2. Blaeschke, Frédéric & Haug, Peter, 2014. "Does Intermunicipal Cooperation Increase Efficiency? Evidence from the Hessian Wastewater Sector," IWH Discussion Papers 11/2014, Halle Institute for Economic Research (IWH).
    3. Laura L�pez-Torres & Diego Prior, 2015. "Should we charge environmental factors for poor students' achievement?," Applied Economics Letters, Taylor & Francis Journals, vol. 22(17), pages 1378-1381, November.

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