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Profit, Productivity and Price Performance Changes in The English and Welsh Water and Sewerage Companies

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  • Maziotis, Alexandros
  • Saal, David S.
  • Thanassoulis, Emmanuel

Abstract

The purpose of this paper is to assess the impact of regulation in the financial performance of the Water and Sewerage companies (WaSCs) in England and Wales. We apply a panel index approach across WaSCs over time to decompose unit-specific (temporal) index number based profitability growth as a function of the profitability, productivity and price performance growth achieved by benchmark firms, and the catch-up to the benchmark firm achieved by less productive firms. The results indicated that the steady decline in average price performance, gains in productivity and relatively stable economic profitability after 2000, suggest that Ofwat is now more focused on passing productivity benefits to consumers, and maintaining stable profitability than it was in earlier regulatory periods. This technique is of great interest for regulators to evaluate the effectiveness of regulation and companies to identify the determinants of profit change and improve future performance, even if sample sizes are limited.

Suggested Citation

  • Maziotis, Alexandros & Saal, David S. & Thanassoulis, Emmanuel, 2012. "Profit, Productivity and Price Performance Changes in The English and Welsh Water and Sewerage Companies," Climate Change and Sustainable Development 142949, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemcl:142949
    DOI: 10.22004/ag.econ.142949
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    References listed on IDEAS

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    1. John Salerian, 2003. "Analysing the Performance of Firms Using a Decomposable Ideal Index Number to Link Profit, Prices and Productivity," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(2), pages 143-155, June.
    2. Saal, David S & Parker, David, 2001. "Productivity and Price Performance in the Privatized Water and Sewerage Companies of England and Wales," Journal of Regulatory Economics, Springer, vol. 20(1), pages 61-90, July.
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    Cited by:

    1. Maziotis, Alexandros & Saal, David S. & Thanassoulis, Emmanuel, 2013. "Profit, Productivity, Price and Quality Performance Changes in the English and Welsh Water and Sewerage Companies," Climate Change and Sustainable Development 146439, Fondazione Eni Enrico Mattei (FEEM).
    2. Maziotis, Alexandros & Saal, David S. & Thanassoulis, Emmanuel & Molinos-Senante, María, 2016. "Price-cap regulation in the English and Welsh water industry: A proposal for measuring productivity performance," Utilities Policy, Elsevier, vol. 41(C), pages 22-30.

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    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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