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The Effects of Consolidation amongst Japanese Water Utilities

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  • Takuya Urakami

    ()

  • David Parker

    ()

Abstract

In many parts of the world, water is supplied by very small, local undertakings. In recent years, there has been a move to consolidation of these utilities in a number of countries. This paper looks at the economic effects of consolidation of Japanese water utilities in the period 1999–2006 using translog cost functions with a hedonic output specification. The results clarify what factors have been most affected in terms of the cost structure of the water utilities after consolidation. Overall, the finding is that consolidation has had some beneficial impact on cost effectiveness, but that the result is surprisingly limited. This appears to be because cost savings from an improvement in the use of scarce water resources have been offset by extra expenditure on supplying water to areas with lower population density.

Suggested Citation

  • Takuya Urakami & David Parker, 2011. "The Effects of Consolidation amongst Japanese Water Utilities," Urban Studies, Urban Studies Journal Limited, vol. 48(13), pages 2805-2825, October.
  • Handle: RePEc:sae:urbstu:v:48:y:2011:i:13:p:2805-2825
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    Cited by:

    1. François Destandau & Serge Garcia, 2014. "Service quality, scale economies and ownership: an econometric analysis of water supply costs," Journal of Regulatory Economics, Springer, vol. 46(2), pages 152-182, October.
    2. Clementina Bruno & Fabrizio Erbetta & Giovanni Fraquelli & Anna Giolitti, 2014. "The efficiency effects of merging Italian water companies," ECONOMIA E DIRITTO DEL TERZIARIO, FrancoAngeli Editore, vol. 2014(3), pages 425-442.
    3. Zschille, Michael, 2012. "Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework," CEPR Discussion Papers 8737, C.E.P.R. Discussion Papers.
    4. Michelle Phillips, 2013. "Inefficiency in Japanese water utility firms: a stochastic frontier approach," Journal of Regulatory Economics, Springer, vol. 44(2), pages 197-214, October.
    5. Michael Zschille, 2014. "Marktstrukturen in der Trinkwasserversorgung," DIW Roundup: Politik im Fokus 43, DIW Berlin, German Institute for Economic Research.
    6. Michael Zschille, 2015. "Consolidating the water industry: an analysis of the potential gains from horizontal integration in a conditional efficiency framework," Journal of Productivity Analysis, Springer, vol. 44(1), pages 97-114, August.
    7. Michael Zschille, 2016. "Cost Structure and Economies of Scale in German Water Supply," Discussion Papers of DIW Berlin 1576, DIW Berlin, German Institute for Economic Research.
    8. repec:spr:waterr:v:31:y:2017:i:8:d:10.1007_s11269-016-1376-9 is not listed on IDEAS
    9. Michael Zschille, 2012. "Consolidating the Water Industry: An Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework," Discussion Papers of DIW Berlin 1187, DIW Berlin, German Institute for Economic Research.
    10. Augusto Mercadier & Walter Cont & Gustavo Ferro, 2016. "Economies of scale in Peru’s water and sanitation sector," Journal of Productivity Analysis, Springer, vol. 45(2), pages 215-228, April.

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