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The impact of governance structure on firm performance: An application to the German water distribution sector

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  • Ruester, Sophia
  • Zschille, Michael

Abstract

This paper investigates the impact of governance structure on firm performance (i.e., retail prices) using a database of 765 German water suppliers. Controlling for scale economies as well as technical and structural characteristics, we find that private sector participation is accompanied with higher retail prices. Furthermore, Eastern states on average feature higher prices mirroring significant investments during the past two decades as well as network over-dimension. Assuming that managers make strategic decisions (e.g., governance form) not randomly but rather decide based on expectations of how their choices affect future performance, we test for this self-selection applying a two-stage model.

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Bibliographic Info

Article provided by Elsevier in its journal Utilities Policy.

Volume (Year): 18 (2010)
Issue (Month): 3 (September)
Pages: 154-162

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Handle: RePEc:eee:juipol:v:18:y:2010:i:3:p:154-162

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Web page: http://www.elsevier.com/locate/inca/30478

Related research

Keywords: Private sector participation Firm performance Water supply;

References

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  1. Oliver Hart & Andrei Shleifer & Robert W. Vishny, 1996. "The Proper Scope of Government: Theory and an Application to Prisons," NBER Working Papers 5744, National Bureau of Economic Research, Inc.
  2. Isabel M. García-Sánchez, 2006. "Efficiency Measurement in Spanish Local Government: The Case of Municipal Water Services," Review of Policy Research, Policy Studies Organization, vol. 23(2), pages 355-372, 03.
  3. Walter, Matthias & Cullmann, Astrid & von Hirschhausen, Christian & Wand, Robert & Zschille, Michael, 2009. "Quo vadis efficiency analysis of water distribution? A comparative literature review," Utilities Policy, Elsevier, vol. 17(3-4), pages 225-232, September.
  4. Eshien Chong & Freddy Huet & Stéphane Saussier & Faye Steiner, 2006. "Public-Private Partnerships and Prices: Evidence from Water Distribution in France," Review of Industrial Organization, Springer, vol. 29(1), pages 149-169, September.
  5. Bhattacharyya, Arunava & Harris, Thomas R. & Narayanan, Rangesan & Raffiee, Kambiz, 1995. "Specification and estimation of the effect of ownership on the economic efficiency of the water utilities," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 759-784, December.
  6. Guasch, J. Luis & Laffont, Jean-Jacques & Straub, Stéphane, 2008. "Renegotiation of concession contracts in Latin America: Evidence from the water and transport sectors," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 421-442, March.
  7. Oliver E. Williamson, 1976. "Franchise Bidding for Natural Monopolies -- in General and with Respect to CATV," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 73-104, Spring.
  8. Estache, Antonio & Kouassi, Eugene, 2002. "Sector organization, governance, and the inefficiency of African water utilities," Policy Research Working Paper Series 2890, The World Bank.
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Citations

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Cited by:
  1. Daniel Albalate & Germà Bel & R. Richard Geddes, 2012. "“Recovery Risk and Labor Costs in Public-Private-Partnerships: Contractual Choice in the U.S. Water industry”," IREA Working Papers 201222, University of Barcelona, Research Institute of Applied Economics, revised Dec 2012.
  2. García-Valiñas, María de los Ángeles & González-Gómez, Francisco & Picazo-Tadeo, Andrés J., 2013. "Is the price of water for residential use related to provider ownership? Empirical evidence from Spain," Utilities Policy, Elsevier, vol. 24(C), pages 59-69.

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