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  • Kristof De Witte

    ()
    (University of Leuven)

  • Elbert Dijkgraaf

    ()
    (Erasmus University Rotterdam)

Abstract

The Dutch drinking water sector experienced two drastic changes over the last 10 years. Firstly, in 1997, the sector association started with a voluntary benchmarking aimed to increase the efficiency and effectiveness of the sector. Secondly, merger activity arose. This paper develops a tailored nonparametric model to dissect and distinguish the effects on efficiency of these two evolutions. In particular, we adapt Free Disposal Hull (FDH) to estimate robust and conditional non-oriented efficiency estimates. Parametric COLS (Fourier) tests show the robustness of the model with respect to the specification and its variables. We classify the merger economies into scale economies and increased incentives to fight inefficiencies. Although we detect a significant efficiency enhancing effect of benchmarking, we find insignificant merger economies due to the absence of scale economies and the absence of increased incentives to fight inefficiencies.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 07-092/3.

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Date of creation: 27 Nov 2007
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Handle: RePEc:dgr:uvatin:20070092

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Web page: http://www.tinbergen.nl

Related research

Keywords: Mergers and acquisitions; efficiency; scale economies; water sector; non-parametric and parametric estimation;

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References

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  1. Serge Garcia & Alban Thomas, 2001. "The Structure of Municipal Water Supply Costs: Application to a Panel of French Local Communities," Journal of Productivity Analysis, Springer, vol. 16(1), pages 5-29, July.
  2. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu & Christine Zulehner, 2001. "The Effects of Mergers: An International Comparison," CIG Working Papers FS IV 01-21, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
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  25. repec:fth:iniesr:543 is not listed on IDEAS
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Citations

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Cited by:
  1. De Witte, Kristof & Mika, Kortelainen, 2009. "Blaming the exogenous environment? Conditional efficiency estimation with continuous and discrete exogenous variables," MPRA Paper 14034, University Library of Munich, Germany.
  2. Ferro, Gustavo & Lentini, Emilio J. & Mercadier, Augusto C. & Romero, Carlos A., 2013. "Eficiencia en la prestación de agua y saneamiento y su vinculación con regiones, propiedad e independencia de los prestadores en Brasil
    [Efficiency in water and sanitation providers and its links
    ," MPRA Paper 48247, University Library of Munich, Germany.
  3. De Witte, Kristof & Marques, Rui, 2009. "Gaming in a benchmarking environment. A non-parametric analysis of benchmarking in the water sector," MPRA Paper 14679, University Library of Munich, Germany.
  4. Kristof De Witte & David S. Saal, 2008. "Is a little sunshine all we need? On the impact of sunshine regulation on profits, productivity and prices in the Dutch drinking water sector," Center for Economic Studies - Discussion papers ces0828, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  5. Michael Zschille, 2012. "Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework," Discussion Papers of DIW Berlin 1187, DIW Berlin, German Institute for Economic Research.
  6. Ferro, Gustavo & Lentini, Emilio & Mercadier, Augusto & Romero, Carlos A., 2010. "Retornos a escala en agua y saneamiento: estimaciones para América Latina
    [Returns to scale in water and sanitation: estimates for Latin Amercia]
    ," MPRA Paper 20324, University Library of Munich, Germany, revised Jan 2010.

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