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Efficiency Incentives for a Regulated Monopoly: Some Lessons from the English and Welsh Water Industry

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  • Anna Bottasso

    () (Università degli Studi di Genova)

  • Maurizio Conti

    () (Università degli Studi di Genova)

Abstract

In this study we analyze the evolution of operating cost efficiency for the English and Welsh water industry over the period 1995-2001 by estimating an heteroskedastic stochastic variable cost frontier. Aim of the paper is to analyze cost efficiency over a period characterized by significant changes in regulatory framework. The main results of this paper are that industry operating cost efficiency has improved and efficiency differentials among firms have steadily narrowed. We argue that this pattern of efficiency has been generated by the incentives provided by comparative and capital market competition which became fully operative after the 1994 price review.

Suggested Citation

  • Anna Bottasso & Maurizio Conti, 2007. "Efficiency Incentives for a Regulated Monopoly: Some Lessons from the English and Welsh Water Industry," Rivista di Politica Economica, SIPI Spa, vol. 97(4), pages 115-144, July-Augu.
  • Handle: RePEc:rpo:ripoec:v:97:y:2007:i:4:p:115-144
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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