Mean and Bold?
AbstractThe 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.
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 Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 07-092/3.
Date of creation: 27 Nov 2007
Date of revision:
Contact details of provider:
Web page: http://www.tinbergen.nl
Mergers and acquisitions; efficiency; scale economies; water sector; non-parametric and parametric estimation;
Find related papers by JEL classification:
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- D20 - Microeconomics - - Production and Organizations - - - General
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-02-23 (All new papers)
- NEP-COM-2008-02-23 (Industrial Competition)
- NEP-ECM-2008-02-23 (Econometrics)
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.:
- Ivaldi, Marc & Mccullough, Gerard, 2010.
"Welfare Tradeoffs in U.S. Rail Mergers,"
IDEI Working Papers
344, Institut d'Économie Industrielle (IDEI), Toulouse.
- Gallant, A. Ronald, 1982. "Unbiased determination of production technologies," Journal of Econometrics, Elsevier, vol. 20(2), pages 285-323, November.
- Charnes, A. & Cooper, W. W. & Golany, B. & Seiford, L. & Stutz, J., 1985. "Foundations of data envelopment analysis for Pareto-Koopmans efficient empirical production functions," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 91-107.
- Cinzia Daraio & Leopold Simar, 2003.
"Introducing Environmental Variables in Nonparametric Frontier Models: a Probabilistic Approach,"
LEM Papers Series
2003/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Cinzia Daraio & Léopold Simar, 2005. "Introducing Environmental Variables in Nonparametric Frontier Models: a Probabilistic Approach," Journal of Productivity Analysis, Springer, vol. 24(1), pages 93-121, 09.
- Mitchell, Karlyn & Onvural, Nur M, 1996. "Economies of Scale and Scope at Large Commercial Banks: Evidence from the Fourier Flexible Functional Form," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 178-99, May.
- Simar, L. & Wilson, P.W., .
"Sensitivity analysis of efficiency scores: how to bootstrap in nonparametric frontier models,"
CORE Discussion Papers RP
-1304, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Léopold Simar & Paul W. Wilson, 1998. "Sensitivity Analysis of Efficiency Scores: How to Bootstrap in Nonparametric Frontier Models," Management Science, INFORMS, vol. 44(1), pages 49-61, January.
- SIMAR, Léopold & WILSON, Paul, 1995. "Sensitivity Analysis to Efficiency Scores : How to Bootstrap in Nonparametric Frontier Models," CORE Discussion Papers 1995043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Gugler, Klaus & Mueller, Dennis C. & Yurtoglu, B. Burcin & Zulehner, Christine, 2003.
"The effects of mergers: an international comparison,"
International Journal of Industrial Organization,
Elsevier, vol. 21(5), pages 625-653, May.
- 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).
- Ivaldi, Marc, et al, 1996. "Comparing Fourier and Translog Specifications of Multiproduct Technology: Evidence from an Incomplete Panel of French Farmers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 649-67, Nov.-Dec..
- Kwoka, J. & Pollitt, M., 2007. "Industry Restructuring, Mergers, And Efficiency: Evidence From Electric Power," Cambridge Working Papers in Economics 0725, Faculty of Economics, University of Cambridge.
- Fumitoshi Mizutani & Takuya Urakami, 2001. "articles: Identifying network density and scale economies for Japanese water supply organizations," Papers in Regional Science, Springer, vol. 80(2), pages 211-230.
- Röller, Lars-Hendrik & Stennek, Johan & Verboven, Frank, 2000.
"Efficiency Gains from Mergers,"
Working Paper Series
543, Research Institute of Industrial Economics.
- Cazals, Catherine & Florens, Jean-Pierre & Simar, Leopold, 2002. "Nonparametric frontier estimation: a robust approach," Journal of Econometrics, Elsevier, vol. 106(1), pages 1-25, January.
- 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.
- Kristof De Witte & Rui C. Marques, 2007. "Designing incenttives in local public utilities, an international comparison of the drinking water sector," Center for Economic Studies - Discussion papers ces0732, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
- Greene, William H., 1980. "Maximum likelihood estimation of econometric frontier functions," Journal of Econometrics, Elsevier, vol. 13(1), pages 27-56, May.
- NAKIL SUNG & Michael Gort, 2006. "Mergers, Capital Gains, And Productivity: Evidence From U.S. Telecommunications Mergers," Contemporary Economic Policy, Western Economic Association International, vol. 24(3), pages 382-394, 07.
- Humphrey, David B. & Vale, Bent, 2004. "Scale economies, bank mergers, and electronic payments: A spline function approach," Journal of Banking & Finance, Elsevier, vol. 28(7), pages 1671-1696, July.
- David S Saal & David Parker, 2000. "The impact of privatization and regulation on the water and sewerage industry in England and Wales: a translog cost function model," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(6), pages 253-268.
- Dashti, Imad, 2003. "Inference from concave stochastic frontiers and the covariance of firm efficiency measures across firms," Energy Economics, Elsevier, vol. 25(6), pages 585-601, November.
- Kim, H Youn, 1987. "Economies of Scale in Multi-product Firms: An Empirical Analysis," Economica, London School of Economics and Political Science, vol. 54(214), pages 185-206, May.
- Creel, Michael & Farell, Montserrat, 2001. "Economies of scale in the US airline industry after deregulation: a Fourier series approximation," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 37(5), pages 321-336, November.
- Paola Fabbri & Giovanni Fraquelli, 2000. "Costs and Structure of Technology in the Italian Water Industry," Empirica, Springer, vol. 27(1), pages 65-82, March.
- Maria Silva Portela & Pedro Borges & Emmanuel Thanassoulis, 2003. "Finding Closest Targets in Non-Oriented DEA Models: The Case of Convex and Non-Convex Technologies," Journal of Productivity Analysis, Springer, vol. 19(2), pages 251-269, April.
- Coelli, Tim & Perelman, Sergio, 1999. "A comparison of parametric and non-parametric distance functions: With application to European railways," European Journal of Operational Research, Elsevier, vol. 117(2), pages 326-339, September.
- Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
- 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.
- Kristof Witte & David Saal, 2010. "Is a little sunshine all we need? On the impact of sunshine regulation on profits, productivity and prices in the Dutch drinking water sector," Journal of Regulatory Economics, Springer, vol. 37(3), pages 219-242, June.
- A. Ruijs & M. Kortelainen & A. Wossink & C.J.E. Schulp & R. Alkemade & Paul Madden, 2012. "Opportunity cost estimation of ecosystem services," The School of Economics Discussion Paper Series 1222, Economics, The University of Manchester.
- 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.
- 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.
- 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.
- 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.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antoine Maartens (+31 626 - 160 892)).
If references are entirely missing, you can add them using this form.