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Gaming in a benchmarking environment. A non-parametric analysis of benchmarking in the water sector

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  • De Witte, Kristof
  • Marques, Rui

Abstract

This paper discusses the use of benchmarking in general and its application to the drinking water sector. It systematizes the various classifications on performance measurement, discusses some of the pitfalls of benchmark studies and provides some examples of benchmarking in the water sector. After presenting in detail the institutional framework of the water sector of the Belgian region of Flanders (without benchmarking experiences), Wallonia (recently started a public benchmark) and the Netherlands (introduced already in 1997 a public benchmark), we non-parametrically measure the productivity gains by the use of a dynamic Malmquist index. The three regions, each at a different stage of the benchmarking circle, exhibit different performance trends. The ‘carrot’ and the ‘stick’ of benchmarking seem to offer an effective incentive to trigger performance. In addition, the Malmquist decompositions provide some evidence on the ‘gaming’ of the stakeholders by the water utilities.

Suggested Citation

  • De Witte, Kristof & Marques, Rui, 2009. "Gaming in a benchmarking environment. A non-parametric analysis of benchmarking in the water sector," MPRA Paper 14679, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:14679
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    File URL: https://mpra.ub.uni-muenchen.de/14679/1/MPRA_paper_14679.pdf
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    References listed on IDEAS

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    1. Jamasb, Tooraj & Nillesen, Paul & Pollitt, Michael, 2004. "Strategic behaviour under regulatory benchmarking," Energy Economics, Elsevier, vol. 26(5), pages 825-843, September.
    2. Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 2008. "The Measurement of Productive Efficiency and Productivity Growth," OUP Catalogue, Oxford University Press, number 9780195183528.
    3. Kristof De Witte & Elbert Dijkgraaf, 2007. "Mean and Bold?," Tinbergen Institute Discussion Papers 07-092/3, Tinbergen Institute.
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    6. Kristof De Witte & Rui C. Marques, 2007. "Designing incenttives in local public utilities, an international comparison of the drinking water sector," Working Papers of Department of Economics, Leuven ces0732, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    7. Cazals, Catherine & Florens, Jean-Pierre & Simar, Leopold, 2002. "Nonparametric frontier estimation: a robust approach," Journal of Econometrics, Elsevier, vol. 106(1), pages 1-25, January.
    8. Marques, Rui Cunha, 2006. "A yardstick competition model for Portuguese water and sewerage services regulation," Utilities Policy, Elsevier, vol. 14(3), pages 175-184, September.
    9. Jamasb, Tooraj & Nillesen, Paul & Pollitt, Michael, 2003. "Gaming the Regulator: A Survey," The Electricity Journal, Elsevier, vol. 16(10), pages 68-80, December.
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    Cited by:

    1. Santos, Joana & Simões, Pedro & Costa, Álvaro & Cunha Marques, Rui, 2010. "Efficiency of the Portuguese metros. is it different from other European metros?," MPRA Paper 34904, University Library of Munich, Germany.
    2. Konstantinos Tsagarakis, 2013. "Does Size Matter? Operating Cost Coverage for Water Utilities," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(5), pages 1551-1562, March.
    3. Molinos-Senante, María & Hernández-Sancho, Francesc & Mocholí-Arce, Manuel & Sala-Garrido, Ramón, 2014. "Economic and environmental performance of wastewater treatment plants: Potential reductions in greenhouse gases emissions," Resource and Energy Economics, Elsevier, vol. 38(C), pages 125-140.

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    More about this item

    Keywords

    Benchmarking; gaming; Malmquist decomposition; regulation; water sector;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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