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Efficiency in the Consolidation of the Italian Water Sector

Author

Listed:
  • Graziano Abrate

    (Università del Piemonte Orientale
    Hermes Research Center)

  • Clementina Bruno

    (Università del Piemonte Orientale
    Hermes Research Center)

  • Fabrizio Erbetta

    (Università del Piemonte Orientale
    Hermes Research Center)

  • Giovanni Fraquelli

    (Università del Piemonte Orientale
    Hermes Research Center
    IRCRES - CNR)

  • Anna Giolitti

    (Hermes Research Center)

Abstract

Despite since the mid-90s the regulation has encouraged horizontal and vertical bundling, the Italian water and sewerage industry is still largely fragmented. This work investigates the potential benefits of the process of consolidation, relying on realistic ex-ante merger hypotheses. A parametric methodology is used to implement the Bogetoft and Wang 2005’s decomposition of potential gains from mergers (J Prod Anal 23:145–171). When looking at strictly technological aspects, results do not provide univocal evidence in favor or against merger strategies, recommending a case-by-case approach in evaluating real merger projects. Moreover, the largest potential gains are due to managerial rather than technological inefficiency, thus their effective ex-post attainment ultimately depend on the ability to tackle the change and on political will.

Suggested Citation

  • Graziano Abrate & Clementina Bruno & Fabrizio Erbetta & Giovanni Fraquelli & Anna Giolitti, 2017. "Efficiency in the Consolidation of the Italian Water Sector," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(8), pages 2447-2463, June.
    • Handle: RePEc:spr:waterr:v:31:y:2017:i:8:d:10.1007_s11269-016-1376-9
    DOI: 10.1007/s11269-016-1376-9
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    Cited by:

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    2. Massarutto, Antonio & Grassetti, Luca & Lambardi di San Miniato, Michele & Moletta, Mattia, 2023. "Efficient firms are all alike, but every inefficient firm is such in its own way: Heterogeneity of costs determinants in the Italian water sector," Utilities Policy, Elsevier, vol. 84(C).
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    4. Ying Li & Yung-Ho Chiu & Tai-Yu Lin & Tzu-Han Chang, 2020. "Pre-Evaluating the Technical Efficiency Gains from Potential Mergers and Acquisitions in the IC Design Industry," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 19(02), pages 525-559, April.

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