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An econometric analysis of private sector participation in China’s urban water supply

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  • Wang, Hongwei
  • Wu, Wenqing
  • Zheng, Shilin
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    Abstract

    This paper explores the impact of private sector participation on industrial performance of urban water supply by using panel data for 35 major cities in China over the period 1998 to 2008. We find that the introduction of private sector participation is significantly correlated with improvement in integrated production capacity and water coverage rate, but not correlated with the investment in fixed assets. Private sector participation has a positive impact on the integrated production capacity in the developed eastern cities and contributes to narrowing the gap of water coverage rate between the less developed central and western cities and the more developed eastern cities. We also find that the participation of foreign companies, but not domestic private companies, significantly improves water industry performance. The research sheds some light on the importance of private participation in urban water markets. However, the performance of domestic private firms in urban water supply still needs be improved.

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    Bibliographic Info

    Article provided by Elsevier in its journal Utilities Policy.

    Volume (Year): 19 (2011)
    Issue (Month): 3 ()
    Pages: 134-141

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    Handle: RePEc:eee:juipol:v:19:y:2011:i:3:p:134-141

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

    Related research

    Keywords: Urban water supply; Private sector participation; Performance evaluation; China;

    References

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    1. Antonio Estache & MartÌn A. Rossi, 2002. "How Different Is the Efficiency of Public and Private Water Companies in Asia?," World Bank Economic Review, World Bank Group, vol. 16(1), pages 139-148, June.
    2. Anne O. Krueger, 1990. "Government Failures in Development," NBER Working Papers 3340, National Bureau of Economic Research, Inc.
    3. Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2002. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality," Working Papers 54, Universidad de San Andres, Departamento de Economia, revised Sep 2005.
    4. James J. Heckman, 1977. "Dummy Endogenous Variables in a Simultaneous Equation System," NBER Working Papers 0177, National Bureau of Economic Research, Inc.
    5. Antonio Estache & A. Gomez-Lobo & D. Leipziger, 2001. "Utilities Privatization and the Poor: Lessons and evidence from Latin America," ULB Institutional Repository 2013/43997, ULB -- Universite Libre de Bruxelles.
    6. Estache, Antonio & Kouassi, Eugene, 2002. "Sector organization, governance, and the inefficiency of African water utilities," Policy Research Working Paper Series 2890, The World Bank.
    7. Donald, Stephen G & Sappington, David E M, 1997. "Choosing among Regulatory Options in the United States Telecommunications Industry," Journal of Regulatory Economics, Springer, vol. 12(3), pages 227-43, November.
    8. Colin Kirkpatrick & David Parker & Yin-Fang Zhang, 2006. "An Empirical Analysis of State and Private-Sector Provision of Water Services in Africa," World Bank Economic Review, World Bank Group, vol. 20(1), pages 143-163.
    9. Colin Kirkpatrick & David Parker, 2005. "Domestic Regulation and the WTO: The Case of Water Services in Developing Countries," The World Economy, Wiley Blackwell, vol. 28(10), pages 1491-1508, October.
    10. Ros, Agustin J, 1999. "Does Ownership or Competition Matter? The Effects of Telecommunications Reform on Network Expansion and Efficiency," Journal of Regulatory Economics, Springer, vol. 15(1), pages 65-92, January.
    11. Kornai, Janos & Weibull, Jorgen W., 1983. "Paternalism, buyers' and sellers' market," Mathematical Social Sciences, Elsevier, vol. 6(2), pages 153-169, November.
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