Economies of Scale and Scope in the Swiss Multi-Utilities Sector
AbstractThis paper explores the economies of scale and scope in the electricity, gas and water utilities. These issues have a crucial importance in the actual policy debates about unbundling the integrated utilities into separate entities, a policy which has often been supported by the ongoing reforms in the deregulation of network industries. This paper argues that the potential improvements in efficiency through unbundling should be assessed against the loss of scope economies. Several econometric specifications including a random-coefficient model have been used to estimate a cost function for a sample of utilities distributing electricity, gas and/or water to the Swiss population. The estimates of scale and scope economies have been compared across different models and the effect of heterogeneity among companies have been explored. While indicating considerable scope and scale economies overall, the results suggest a significant variation in scope economies across companies due to unobserved heterogeneity.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CEPE Center for Energy Policy and Economics, ETH Zurich in its series CEPE Working paper series with number 07-59.
Length: 29 pages
Date of creation: Sep 2007
Date of revision:
Find related papers by JEL classification:
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
- L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Pulley, Lawrence B & Humphrey, David B, 1993. "The Role of Fixed Costs and Cost Complementarities in Determining Scope Economies and the Cost of Narrow Banking Proposals," The Journal of Business, University of Chicago Press, vol. 66(3), pages 437-62, July.
- Tovar, B. & Jara-Diaz, S. & Trujillo, L., 2007. "Econometric estimation of scale and scope economies within the port sector: a review," Working Papers 07/04, Department of Economics, City University London.
- Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2006.
"Economies of scale and scope in local public transportation,"
CEPE Working paper series
06-48, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2007. "Economies of Scale and Scope in Local Public Transportation," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 41(3), pages 345-361, September.
- Sing, Merrile, 1987. "Are Combination Gas and Electric Utilities Multiproduct Natural Monopolies?," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 392-98, August.
- Reto Foellmi & Urs Meister, 2004.
"Product-Market Competition in the Water Industry: Voluntary Nondiscriminatory Pricing,"
0032, University of Zurich, Institute for Strategy and Business Economics (ISU).
- Reto Foellmi & Urs Meister, 2005. "Product-Market Competition in the Water Industry: Voluntary Non-discriminatory Pricing," Journal of Industry, Competition and Trade, Springer, vol. 5(2), pages 115-135, June.
- Reto Föllmi & Urs Meister, . "Product-Market Competition in the Water Industry: Voluntarily Nondiscriminatory Pricing," IEW - Working Papers 115, Institute for Empirical Research in Economics - University of Zurich.
- Panzar, John C., 1989. "Technological determinants of firm and industry structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 1, pages 3-59 Elsevier.
- Giovanni Fraquelli & Massimiliano Piacenza & Davide Vannoni, 2004. "Scope and scale economies in multi-utilities: evidence from gas, water and electricity combinations," Applied Economics, Taylor & Francis Journals, vol. 36(18), pages 2045-2057.
- E. Martínez-Budría & S. Jara-Díaz & F. Ramos-Real, 2003. "Adapting Productivity Theory to the Quadratic Cost Function. An Application to the Spanish Electric Sector," Journal of Productivity Analysis, Springer, vol. 20(2), pages 213-229, September.
- Caves, Douglas W & Christensen, Laurits R & Tretheway, Michael W, 1980. "Flexible Cost Functions for Multiproduct Firms," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 477-81, August.
- Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January.
- Pulley, Lawrence B & Braunstein, Yale M, 1992. "A Composite Cost Function for Multiproduct Firms with an Application to Economies of Scope in Banking," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 221-30, May.
- Featherstone, Allen M. & Moss, Charles B., 1993. "Measuring Economies of Scale and Scope in Agricultural Banking," Proceedings: 1993 Regional Committee NC-207, October 4-5, 1993, Chicago, Illinois 131339, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
- A. Yatchew, 2000. "Scale economies in electricity distribution: a semiparametric analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(2), pages 187-210.
- Piacenza, Massimiliano & Vannoni, Davide, 2004. "Choosing among alternative cost function specifications: an application to Italian multi-utilities," Economics Letters, Elsevier, vol. 82(3), pages 415-422, March.
- Ottoz Elisabetta & Di Giacomo Marina, 2008.
"Diversification strategies and scope economies: Evidence from a sample of Italian regional bus transport Pproviders,"
Department of Economics and Statistics Cognetti de Martiis. Working Papers
200802, University of Turin.
- Elisabetta Ottoz & Marina Di Giacomo, 2012. "Diversification strategies and scope economies: evidence from a sample of Italian regional bus transport providers," Applied Economics, Taylor & Francis Journals, vol. 44(22), pages 2867-2880, August.
- Bottasso, Anna & Conti, Maurizio & Piacenz, Massimiliano & Vannoni, Davide, 2011.
"The appropriateness of the poolability assumption for multiproduct technologies: Evidence from the English water and sewerage utilities,"
International Journal of Production Economics,
Elsevier, vol. 130(1), pages 112-117, March.
- Anna Bottasso & Maurizio Conti & Massimiliano Piacenza & Davide Vannoni, 2010. "The Appropriateness of the Poolability Assumption for Multiproduct Technologies: Evidence from the English Water and Sewerage Utilities," Carlo Alberto Notebooks 183, Collegio Carlo Alberto.
- Fetz, Aurelio & Filippini, Massimo, 2010. "Economies of vertical integration in the Swiss electricity sector," Energy Economics, Elsevier, vol. 32(6), pages 1325-1330, November.
- Carvalho, Pedro & Marques, Rui Cunha & Berg, Sanford, 2012.
"A meta-regression analysis of benchmarking studies on water utilities market structure,"
Elsevier, vol. 21(C), pages 40-49.
- Carvalho, Pedro & Marques, Rui Cunha & Berg, Sanford, 2011. "A meta-regression analysis of benchmarking studies on water utilities market structure," MPRA Paper 32894, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carlos Ordas).
If references are entirely missing, you can add them using this form.