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articles: Identifying network density and scale economies for Japanese water supply organizations

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  • Fumitoshi Mizutani

    ()
    (Graduate School of Business Administration , Kobe University, 2-1 Rokkodai, Nada-ku, Kobe 657-8501, Japan)

  • Takuya Urakami

    ()
    (Graduate School of Business Administration , Kobe University, 2-1 Rokkodai, Nada-ku, Kobe 657-8501, Japan)

Abstract

Within this analysis we determine the optimal size (that is, with the minimum average cost) of a water supply enterprise and reconsider the matter of scale economies, using sample data from Japanese water supply organizations. After surveying evidence from previous studies of scale economies in the water supply industry, we estimate cost functions with three different cost models: the log-linear, translog and translog with a hedonic function. We obtain the result that economies of network density do exist, but that there are slight diseconomies of scale at the sample mean point. The optimal size of a water supply organization would be one supplying a population of approximately 766,000 people.

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Bibliographic Info

Article provided by Springer in its journal Papers in Regional Science.

Volume (Year): 80 (2001)
Issue (Month): 2 ()
Pages: 211-230

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Handle: RePEc:spr:presci:v:80:y:2001:i:2:p:211-230

Note: Received: 10 March 2000
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Related research

Keywords: Economies of scale; water supply; optimal size; average cost; translog cost function;

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