Inefficiency in Japanese water utility firms: a stochastic frontier approach

Michelle Phillips

Journal of Regulatory Economics, 2013, vol. 44, issue 2, 197-214

Abstract: I examine inefficiencies in Japanese water utility companies. Efficiency in this context is defined as a firm’s capacity to maximize output given a fixed level of inputs. The findings suggest that the average operation rate, customer density and size variables are associated with lower levels of inefficiency (or higher levels of efficiency), while water purification (a conditioning variable capturing low initial water quality), subsidies and outsourcing are associated with higher levels of inefficiency. Since inefficiency exists, there is an opportunity to improve Japanese water utilities by working on emulating “best practice” firms whenever possible and by providing a regulatory framework that can set appropriate incentive schemes to do so. Copyright Springer Science+Business Media New York 2013

Keywords: Water utility regulation; Japan water utilities; Stochastic frontier analysis; L51; L95 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11149-013-9225-8

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