Is a little sunshine all we need? On the impact of sunshine regulation on profits, productivity and prices in the Dutch drinking water sector

Kristof De Witte and David Saal

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: This paper analyzes the conduct of publicly owned monopolistic utilities regulated by a voluntary sunshine regulatory model (i.e. publication of the performances of utilities). In particular, we examine the behaviour of Dutch drinking water utilities before and after the introduction of the sunshine regulation. As during the period 1992-2006 several alternative regulatory reforms including privatization, yardstick competition and profit regulation were also seriously considered, we examine how the discussion and possible implementation of these reforms influenced the behaviour of the utilities. By decomposing profit change into its economic drivers (quantity effect, price effect, operating efficiency, technical progress, scale, etc.), our results suggest that in an appropriate political and institutional context, sunshine regulation can be an effective and appropriate mean of insuring that publicly organised services are efficiently and profitably provided. In methodological terms, the profit decomposition is extended to robust (i.e. allowing for stochastic elements) and conditional (i.e. accounting for heterogeneity) non-parametric efficiency measures.

Keywords: Regulation; Drinking water utilities; Profit decomposition; Data Envelopment Analysis (search for similar items in EconPapers)
JEL-codes: C14 L33 L51 L95 (search for similar items in EconPapers)
Date: 2008-10
New Economics Papers: this item is included in nep-eff and nep-reg
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Is a little sunshine all we need? On the impact of sunshine regulation on profits, productivity and prices in the Dutch drinking water sector (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces0828

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