Journal ArticleDOI
Public utility planning and cost efficiency in a decentralized regulation context: the case of the Italian integrated water service
TLDR
In this paper, the authors analyzed the cost efficiency embedded in these budget plans to evaluate the actual capability of local regulators to adequately orientate firm performance and found that the decentralized planning mechanism applied in Italian water and sewerage industry regulation failed in fulfilling the declared goal.Abstract:
The reformed Italian water and sewerage industry has several distinctive features. It is based on a decentralized structure where local authorities are entitled to define detailed long-term budget plans that claim to provide efficiency incentives to operating suppliers. Unlike previous studies, this paper analyzes the cost efficiency embedded in these budget plans to evaluate the actual capability of local regulators to adequately orientate firm performance. Several panel data cost frontier models were estimated that incorporate diverse specifications for inefficiency and unobserved heterogeneity terms. The results indicate that the decentralized planning mechanism applied in Italian water and sewerage industry regulation failed in fulfilling the declared goal and further highlights that the time-invariant terms are the prevailing source of cost differences, which may conceal a structural component attributable to persistent inefficiency.read more
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The economic performance of Swiss drinking water utilities
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References
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Journal ArticleDOI
On the estimation of technical inefficiency in the stochastic frontier production function model
Peter Schmidt,James Jondrow +1 more
TL;DR: In this paper, the expected value of u, conditional on (v − u ) is considered, where v is a normal error term representing pure randomness, and u is a non-negative error term describing technical inefficiency.
Journal ArticleDOI
Production Frontiers and Panel Data
Peter Schmidt,Robin C. Sickles +1 more
TL;DR: In this article, the authors consider the estimation of a stochastic frontier production function, which is the type introduced by Aigner, Lovell, and Schmidt (1977) and Meeusen and van den Broeck (1977).
Journal ArticleDOI
Reconsidering heterogeneity in panel data estimators of the stochastic frontier model
TL;DR: This paper examines several extensions of the stochastic frontier that account for unmeasured heterogeneity as well as firm inefficiency, and considers a special case of the random parameters model that produces a random effects model that preserves the central feature of the Stochastic frontier model and accommodates heterogeneity.
Journal ArticleDOI
The measurement and sources of technical inefficiency in the indonesian weaving industry
Mark M. Pitt,Lung-fei Lee +1 more
TL;DR: In this paper, three firm attributes are identified as being potentially related to firm efficiency: firm ownership, age, and size, and the importance of these attributes as sources of inefficiency in the Indonesian weaving industry is investigated and implications of the find,ings discussed.
Journal ArticleDOI
A Theory of Yardstick Competition
TL;DR: In this paper, the authors proposed a mechanism in which the price the regulated firm receives depends on the costs of identical firms, and in equilibrium each firm chooses a socially efficient level of cost reduction.