Profit, Productivity and Price Performance Changes in The English and Welsh Water and Sewerage Companies

Alexandros Maziotis, David Saal and Emmanuel Thanassoulis
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Alexandros Maziotis: Fondazione Eni Enrico Mattei (FEEM) and Euro-Mediterranean Centre on Climate Change (CMCC)
Emmanuel Thanassoulis: Aston University

No 2012.84, Working Papers from Fondazione Eni Enrico Mattei

Abstract: The purpose of this paper is to assess the impact of regulation in the financial performance of the Water and Sewerage companies (WaSCs) in England and Wales. We apply a panel index approach across WaSCs over time to decompose unit-specific (temporal) index number based profitability growth as a function of the profitability, productivity and price performance growth achieved by benchmark firms, and the catch-up to the benchmark firm achieved by less productive firms. The results indicated that the steady decline in average price performance, gains in productivity and relatively stable economic profitability after 2000, suggest that Ofwat is now more focused on passing productivity benefits to consumers, and maintaining stable profitability than it was in earlier regulatory periods. This technique is of great interest for regulators to evaluate the effectiveness of regulation and companies to identify the determinants of profit change and improve future performance, even if sample sizes are limited.

Keywords: Profit Decomposition; Productivity; Price Performance; Panel Index Numbers; Regulation; Water and Sewerage Industry (search for similar items in EconPapers)
JEL-codes: Q5 (search for similar items in EconPapers)
Date: 2012-11
New Economics Papers: this item is included in nep-bec and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Profit, Productivity and Price Performance Changes in The English and Welsh Water and Sewerage Companies (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2012.84

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