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The efficiency effects of merging Italian water companies

Author

Listed:
  • Clementina Bruno
  • Fabrizio Erbetta
  • Giovanni Fraquelli
  • Anna Giolitti

Abstract

The Italian water sector is highly fragmented. Legislative reforms proposed during time tried to steer the industry towards greater consolidation of the service suppliers. The underlying consideration is that an increase in operational scale can generate potential improvements in efficiency and hence a reduction in tariffs. Using the methodology Data Envelopment Analysis (DEA), this paper investigates, for the first time on the Italian case, the potential gains or losses associated with merger plans between companies within regional territories. The results generally indicate potential efficiency gains achievable at the individual levels. A positive "pure" effect due to merger seems to hold when very small companies are involved, even if the on average merger itself does not seem to play a significant role.

Suggested Citation

  • Clementina Bruno & Fabrizio Erbetta & Giovanni Fraquelli & Anna Giolitti, 2014. "The efficiency effects of merging Italian water companies," ECONOMIA E DIRITTO DEL TERZIARIO, FrancoAngeli Editore, vol. 2014(3), pages 425-442.
    • Handle: RePEc:fan:ededed:v:html10.3280/ed2014-003006
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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