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

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Author Info
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)

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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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Publisher 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;

Find related papers by JEL classification:
L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

Cited by:
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  1. NAUGES Céline & VAN DEN BERG Caroline, 2007. "How "natural" are natural monopolies in the water supply and sewerage sector? Case studies from developing and transition economies," Working Papers 07.05.226, LERNA, University of Toulouse. [Downloadable!]
  2. Takuya Urakami, 2005. "Identifying scale economies for different types of water supply organizations in Japan," ERSA conference papers ersa05p370, European Regional Science Association. [Downloadable!]
  3. Peter Haug, 2007. "Local Government Control and Efficiency of the Water Industry: An Empirical Analysis of Water Suppliers in East Germany," IWH Discussion Papers 3-07, Halle Institute for Economic Research. [Downloadable!]
  4. Takuya Urakami & Noriyoshi Nakayama, 2003. "Comparisons of efficiencies between two types of DMUs : an application to Japanese public water companies," ERSA conference papers ersa03p179, European Regional Science Association. [Downloadable!]
  5. Kristof De Witte & Elbert Dijkgraaf, 2007. "Mean and Bold?," Tinbergen Institute Discussion Papers 07-092/3, Tinbergen Institute. [Downloadable!]
  6. Céline Nauges & Caroline Berg, 2008. "Economies of density, scale and scope in the water supply and sewerage sector: a study of four developing and transition economies," Journal of Regulatory Economics, Springer, vol. 34(2), pages 144-163, October. [Downloadable!] (restricted)
  7. Nauges, Celine & van den Berg, Caroline, 2007. "How"natural"are natural monopolies in the water supply and sewerage sector ? Case studies from developing and transition economies," Policy Research Working Paper Series 4137, The World Bank. [Downloadable!]
  8. Takuya Urakami, 2004. "The effects of subsidies on the cost structure of Japanese water supply organizations," ERSA conference papers ersa04p260, European Regional Science Association. [Downloadable!]
  9. Fabrizio Erbetta & Martin Cave, 2007. "Regulation and Efficiency Incentives: Evidence from the England and Wales Water and Sewerage Industry," Review of Network Economics, Concept Economics, vol. 6(4), pages 425-452, December. [Downloadable!]
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