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Capturing the environment, a metafrontier approach to the drinking water sector

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  • Kristof De Witte
  • Rui C. Marques

Abstract

Environmental factors add complexity to the comparison between specific activities or entire entities. Decision making units with an inferior performance are tempted to invoke that their organization is different from the others in the data set. By reinterpreting and extending the metafrontier literature, we propose an all-embracing concept to fully capture the operational environment. We suggest the ‘Group Specific Technical Efficiency’ as a new measure to assess the overall efficiency of a utility while allowing for environmental differences. A real-world example of drinking water utilies out of 5 different countries illustrates the concept.

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File URL: http://www.econ.kuleuven.be/eng/ew/discussionpapers/Dps08/Dps0804.pdf
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Bibliographic Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces0804.

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Date of creation: Mar 2008
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Handle: RePEc:ete:ceswps:ces0804

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Related research

Keywords: Free Disposal Hull; Efficiency Measurement; Environmental Variables; Metafrontier; Water Industry;

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Cited by:
  1. 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.
  2. Kristof De Witte & Wim Groot & Henri?tte Maassen van den Brink, 2012. "The Efficiency of Education in Generating Literacy: A Stochastic Frontier Approach," Review of Economics & Finance, Better Advances Press, Canada, vol. 2, pages 25-37, February.
  3. Steven Renzetti & Diane P. Dupont, 2009. "Measuring the Technical Efficiency of Municipal Water Suppliers: The Role of Environmental Factors," Land Economics, University of Wisconsin Press, vol. 85(4), pages 627-636.
  4. De Witte, K. & Maassen van den Brink, H. & Groot, W., 2010. "The efficiency of education in generating literacy: a stochastic frontier approach," Working Papers 30, Top Institute for Evidence Based Education Research.
  5. Shinji Yane & Sanford Berg, 2013. "Sensitivity analysis of efficiency rankings to distributional assumptions: applications to Japanese water utilities," Applied Economics, Taylor & Francis Journals, vol. 45(17), pages 2337-2348, June.

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