Firm-level inefficiency and its determinants in the Swedish water and wastewater sector

Magnus Söderberg

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Abstract: The Swedish Water and Wastewater (WW) utilities are subject to a cost-of-service regulation with no regulatory incentives to reduce costs. An estimation of firm-level inefficiency using stochastic frontier models on a cross-sectional sample of 148 utilities from 2006 suggests that overall the sector has at least a 15% cost reduction potential. Utilities can increase efficiency by reducing network losses. The cost frontier shifts to a higher level when (1) two or more municipalities merge their WW operations and when (2) utilities receive tax subsidies.

Date: 2011-02
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Published in Applied Economics Letters, 2011, 18 (12), pp.1149-1153. ⟨10.1080/13504851.2010.528349⟩

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Journal Article: Firm-level inefficiency and its determinants in the Swedish water and wastewater sector (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00768603

DOI: 10.1080/13504851.2010.528349

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