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Profit, Productivity, Price and Quality Performance Changes in the English and Welsh Water and Sewerage Companies

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  • Maziotis, Alexandros
  • Saal, David S.
  • Thanassoulis, Emmanuel

Abstract

The purpose of this paper is the evaluation of various profit drivers such as price changes, productivity changes and quality levels on the financial performance of the Water and Sewerage Companies (WaSCs) over time in the case when the number of observations is limited. We thereby follow Maziotis, Saal and Thanassoulis (2012) approach and extend it by measuring the impact of exogenous factors such as drinking water and sewerage treatment quality on profitability, productivity and price performance measures. The results suggest that while quality improvements have significantly contributed to the productivity performance of the WaSCs, they have also contributed negatively to their price performance. Overall, after 2000 steady reductions in average price performance, gains in productivity and stable economic profitability were apparent. This trend indicates Ofwat’s policy on passing productivity benefits to consumers, and sustaining stable profitability than it was in earlier regulatory periods. This technique is of great interest for both regulators and regulated companies to better identify the sources of profit variation and aid them in evaluating both the effectiveness of a regulatory price cap scheme and the performance of the regulated companies, when the sample size is extremely limited.

Suggested Citation

  • Maziotis, Alexandros & Saal, David S. & Thanassoulis, Emmanuel, 2013. "Profit, Productivity, Price and Quality Performance Changes in the English and Welsh Water and Sewerage Companies," Climate Change and Sustainable Development 146439, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcl:146439
    DOI: 10.22004/ag.econ.146439
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    References listed on IDEAS

    as
    1. Saal, David S & Parker, David, 2001. "Productivity and Price Performance in the Privatized Water and Sewerage Companies of England and Wales," Journal of Regulatory Economics, Springer, vol. 20(1), pages 61-90, July.
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    4. Alexandros Maziotis & David S. Saal & Emmanuel Thanassoulis, 2012. "Profit, Productivity and Price Performance Changes in The English and Welsh Water and Sewerage Companies," Working Papers 2012.84, Fondazione Eni Enrico Mattei.
    5. David Saal & David Parker & Tom Weyman-Jones, 2007. "Determining the contribution of technical change, efficiency change and scale change to productivity growth in the privatized English and Welsh water and sewerage industry: 1985–2000," Journal of Productivity Analysis, Springer, vol. 28(1), pages 127-139, October.
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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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