Economies of Scale and Scope in the Swiss Multi-Utilities Sector

Mehdi Farsi, Aurelio Fetz () and Massimo Filippini
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Aurelio Fetz: Center for Energy Policy and Economics CEPE, Department of Management, Technology and Economics, ETH Zurich, Switzerland

No 07-59, CEPE Working paper series from CEPE Center for Energy Policy and Economics, ETH Zurich

Abstract: This paper explores the economies of scale and scope in the electricity, gas and water utilities. These issues have a crucial importance in the actual policy debates about unbundling the integrated utilities into separate entities, a policy which has often been supported by the ongoing reforms in the deregulation of network industries. This paper argues that the potential improvements in efficiency through unbundling should be assessed against the loss of scope economies. Several econometric specifications including a random-coefficient model have been used to estimate a cost function for a sample of utilities distributing electricity, gas and/or water to the Swiss population. The estimates of scale and scope economies have been compared across different models and the effect of heterogeneity among companies have been explored. While indicating considerable scope and scale economies overall, the results suggest a significant variation in scope economies across companies due to unobserved heterogeneity.

JEL-codes: C33 D24 L11 L25 L94 L95 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2007-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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