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Local Government Control and Efficiency of the Water Industry: An Empirical Analysis of Water Suppliers in East Germany

Listed author(s):
  • Peter Haug

The paper deals with the effects of local governments’ interference with business affairs of publicly owned utilities. A partial model is presented to illustrate the consequences of “democratic control” for the public managers’ effort and the efficiency of local public production. To check the theoretical results empirically, a two-stage data envelopment analysis (DEA) is carried out for a sample of East German water suppliers. The organisational form is used as a measure for the degree of municipal control. The results of the OLS- and Tobit regression indicate an efficiency-enhancing effect of organisational forms with less distinctive control options for local politicians.

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Paper provided by Halle Institute for Economic Research in its series IWH Discussion Papers with number 3.

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Date of creation: Feb 2007
Handle: RePEc:iwh:dispap:3-07
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