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Does Private Management Of Water Supply Services Really Increase Prices? An Empirical Analysis

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Author Info
Roberto Martínez-Espiñeira (St. Francis Xavier University)
Maria A. García-Valiñas (University of Oviedo)
Francisco González-Gómez (University of Granada)

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Abstract

In this paper we try to explain differences in the average price of domestic water supply services in Spain, paying special attention to the effects of privatisation of the service on price levels. We base our empirical analysis on the application of a `treatment effects' model on a sample of 53 major urban municipalities. This model accounts for the fact that municipalities do not randomly assign themselves between a group using strictly public ownership and management and a group where all or part of the service has been delegated to a private firm. We find that, once this endogeneity is taken into account, there seems to be a positive and significant effect of privatisation on water price levels.

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File URL: http://www.ugr.es/~teoriahe/RePEc/gra/fegper/FEGWP507.pdf
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Publisher Info
Paper provided by Faculty of Economics and Business (University of Granada) in its series FEG Working Paper Series with number 07/05.

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Length: 34 pages
Date of creation: 22 Nov 2007
Date of revision:
Handle: RePEc:gra:fegper:07/05

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Related research
Keywords: Urban water services; privatization; water prices;

Find related papers by JEL classification:
C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out
L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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  1. Kirkpatrick, Colin & Parker, David & Zhang, Yin-Fang, 2004. "State versus Private Sector Provision of Water Services in Africa: A Statistical, DEA and Stochastic Cost Frontier Analysis," Centre on Regulation and Competition (CRC) Working papers 30604, University of Manchester, Institute for Development Policy and Management (IDPM). [Downloadable!]
  2. Isabel M. García-Sánchez, 2006. "Efficiency Measurement in Spanish Local Government: The Case of Municipal Water Services," Review of Policy Research, Policy Studies Organization, vol. 23(2), pages 355-372, 03. [Downloadable!] (restricted)
  3. Antonio Estache & MartÌn A. Rossi, 2002. "How Different Is the Efficiency of Public and Private Water Companies in Asia?," World Bank Economic Review, Oxford University Press, vol. 16(1), pages 139-148, June.
  4. Crain, W Mark & Zardkoohi, Asghar, 1978. "A Test of the Property-Rights Theory of the Firm: Water Utilities in the United States," Journal of Law & Economics, University of Chicago Press, vol. 21(2), pages 395-408, October.
  5. Arunava Bhattacharyya & Elliott Parker & Kambiz Raffiee, 1994. "An Examination of the Effect of Ownership on the Relative Efficiency of Public and Private Water Utilities," Land Economics, University of Wisconsin Press, vol. 70(2), pages 197-209. [Downloadable!] (restricted)
  6. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Blackwell Publishing, vol. 64(4), pages 605-54, October. [Downloadable!] (restricted)
  7. Feigenbaum, Susan & Teeples, Ronald, 1983. "Public versus Private Water Delivery: A Hedonic Cost Approach," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 672-78, November. [Downloadable!] (restricted)
  8. Bhattacharyya, Arunava & Harris, Thomas R. & Narayanan, Rangesan & Raffiee, Kambiz, 1995. "Specification and estimation of the effect of ownership on the economic efficiency of the water utilities," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 759-784, December. [Downloadable!] (restricted)
  9. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February. [Downloadable!] (restricted)
  10. Marco Caliendo & Reinhard Hujer, 2005. "The Microeconometric Estimation of Treatment Effects - An Overview," IZA Discussion Papers 1653, Institute for the Study of Labor (IZA). [Downloadable!]
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  11. Byrnes, Patricia & Grosskopf, Shawna & Hayes, Kathy, 1986. "Efficiency and Ownership: Further Evidence," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 337-41, May. [Downloadable!] (restricted)
  12. Ashenfelter, Orley & Card, David, 1985. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 648-60, November. [Downloadable!] (restricted)
    Other versions:
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