Cost Efficiency and Scale Economies of Japanese Water Utilities
AbstractWith the data of 831 Japanese water utilities from 1999 to 2008, we used the stochastic cost frontier analysis with a true fixed-effect model in order to estimate the cost efficiency and scale economies. We found that cost inefficiency was approximately 37%. The economies of water delivery volume were observed and found to be remarkably higher for small water utilities than for large ones. Scale economies were also discovered in small water utilities; however, scale diseconomies are likely to be incurred in larger water utilities. The optimal supply population size of a water utility is estimated to be 85,658 consumers, with a water delivery volume of 15.7 million m3 and a network length of 522 km.
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Bibliographic InfoPaper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 11-19.
Length: 23 pages
Date of creation: May 2011
Date of revision:
Cost Efficiency; Scale Economies; Optimal Size; Japanese Water Utilities;
Find related papers by JEL classification:
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
- L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-06-04 (Agricultural Economics)
- NEP-ALL-2011-06-04 (All new papers)
- NEP-EFF-2011-06-04 (Efficiency & Productivity)
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