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Il servizio idrico in Italia: un’analisi empirica sull’efficienza dei gestori [The water service in Italy: an empirical analysis about cost efficiency]

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Abstract

In this paper we investigate the existence of the economies of scale and density in the Italian water sector, in the period 2005-2007. For this purpose, given the current developments of the reform introduced by the Galli Law, we review the main studies on the cost variables and on the evidence of economies of scale and density in this sector. Considering a sample of thirty water firms, through the use of descriptive statistics we find the values of the most important variables used to study efficiency and productivity, such as the average labour cost per employee and the Km of network per user. The econometric analysis on efficiency is conducted by using the SURE method in the estimate of a TransLog variable cost function. The results show evidence of economies of scale and density in the short and in the long run. The small-medium firms display significant economies, whereas, as size increases, benefits from scale gradually decline until they turn to diseconomies of scale for companies serving a population of more than 500000.

Suggested Citation

  • Anna Giolitti, 2010. "Il servizio idrico in Italia: un’analisi empirica sull’efficienza dei gestori [The water service in Italy: an empirical analysis about cost efficiency]," CERIS Working Paper 201002, CNR-IRCrES Research Institute on Sustainable Economic Growth - Torino (TO) ITALY - former Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY.
    • Handle: RePEc:csc:cerisp:201002
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    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.
    2. Massimo Filippini & Nevenka Hrovatin & Jelena Zorić, 2008. "Cost efficiency of Slovenian water distribution utilities: an application of stochastic frontier methods," Journal of Productivity Analysis, Springer, vol. 29(2), pages 169-182, April.
    3. Paola Fabbri & Giovanni Fraquelli, 2000. "Costs and Structure of Technology in the Italian Water Industry," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 27(1), pages 65-82, March.
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    More about this item

    Keywords

    Water sector; Efficiency; Economies of scale; Economies of density; SURE method;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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