Incorporating water purification in efficiency evaluation: evidence from Japanese water utilities
AbstractThis study attempts to show that the inclusion of water purification efforts should be another crucial dimension in the efficiency measurement. I use a Stochastic Cost Frontier (SCF) to estimate the technical efficiency of 392 Japanese water utilities in 2005. The results show that a water purification effort may increase cost, and that its inclusion in efficiency evaluation leads to some specific changes in efficiency score and the ranking of water utilities. Furthermore, this incorporation enables the impact of different qualities of source water on efficiency to be controlled. The result suggests that to encourage water purification efforts, it is crucial to incorporate purification in benchmarking.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics Letters.
Volume (Year): 18 (2011)
Issue (Month): 18 (December)
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Other versions of this item:
- Theara Horn, 2009. "Incorporating water purification in efficiency evaluation: Evidence from Japanese water utilities," Discussion Papers in Economics and Business 09-40, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- H49 - Public Economics - - Publicly Provided Goods - - - Other
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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