IDEAS home Printed from
   My bibliography  Save this article

Productivity growth and price regulation of Slovenian water distribution utilities


  • Massimo Filippini

    () (Swiss Federal Institute of Technology Zurich and University of Lugano, Faculty of Economics, Switzerland)

  • Nevenka Hrovatin

    (University of Ljubljana, Faculty of Economics, Ljubljana, Slovenia)

  • Jelena Zoric

    (University of Ljubljana, Faculty of Economics, Ljubljana, Slovenia)


This paper aims to analyse the price regulation method and performance of the water industry in Slovenia. A stochastic cost frontier model is employed to estimate and decompose the total factor productivity (TFP) growth of water distribution utilities in the 1997-2003 period. The main goal is to find out whether the lack of proper incentives to improve performance has resulted in the low TFP growth of Slovenian water distribution utilities. The evidence suggests that cost inefficiencies are present in water utilities, which indicates considerable cost saving potential in the analysed industry. Technical change is found to have positively affected the TFP growth over time, while cost inefficiency levels remained essentially unchanged. Overall, the average annual TFP growth in the analysed period is estimated to be only slightly above zero, which is a relatively poor result. This can largely be contributed to the present institutional and regulatory setting that does not stimulate utilities to improve productivity. Therefore, the introduction of an independent regulatory agency and an incentive-based price regulation scheme should be seriously considered in order to enhance the performance of Slovenian water distribution utilities.

Suggested Citation

  • Massimo Filippini & Nevenka Hrovatin & Jelena Zoric, 2010. "Productivity growth and price regulation of Slovenian water distribution utilities," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 28(1), pages 89-112.
  • Handle: RePEc:rfe:zbefri:v:28:y:2010:i:1:p:89-112

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Fumitoshi Mizutani & Takuya Urakami, 2001. "articles: Identifying network density and scale economies for Japanese water supply organizations," Papers in Regional Science, Springer;Regional Science Association International, vol. 80(2), pages 211-230.
    2. Antonioli, B. & Filippini, M., 2001. "The use of a variable cost function in the regulation of the Italian water industry," Utilities Policy, Elsevier, vol. 10(3-4), pages 181-187.
    3. Youn Kim, H. & Clark, Robert M., 1988. "Economies of scale and scope in water supply," Regional Science and Urban Economics, Elsevier, vol. 18(4), pages 479-502, November.
    4. 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.
    5. Baldwin, Robert & Cave, Martin & Lodge, Martin, 2011. "Understanding Regulation: Theory, Strategy, and Practice," OUP Catalogue, Oxford University Press, edition 2, number 9780199576098, June.
    6. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    7. John Ashton, 2000. "Cost efficiency in the UK water and sewerage industry," Applied Economics Letters, Taylor & Francis Journals, vol. 7(7), pages 455-458.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Kellermann, Magnus A., 2015. "Total Factor Productivity Decomposition and Unobserved Heterogeneity in Stochastic Frontier Models," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 44(1), April.

    More about this item


    TFP growth; SFA; cost efficiency; water distribution utilities; price regulation;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rfe:zbefri:v:28:y:2010:i:1:p:89-112. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antica Sergovic). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.