EconPapers    
Economics at your fingertips  
 

(UN)Bundling public-private partnership contracts in the water sector: competition in auctions and economies of scale in operation

Atsushi Iimi

No 4459, Policy Research Working Paper Series from The World Bank

Abstract: In public-private partnership transactions in the water sector, one of the alleged concerns is that there is little market competition at the auction stage. This paper casts light on a tradeoff between the competition effect at the auction level and potential economies of scale in service operation. If the authorities design a large-scale public-private partnership water transaction, it is expected to exploit operational scale economies. But the competition effect may have to be sacrificed. The paper shows a risk that the selection of the contract size could be a very restrictive condition that excludes many prospective bidders. Moreover, the paper quantifies the optimal size of public-private partnership contracts in the sector by estimating a cost function. The analysis shows that economies of scale exist but tend to diminish quickly as production increases. When the amount of water sold exceeds about 40 million m3, the statistical significance of economies of scale disappears. And there is no rationale for auctioning the water operation with annual water delivery of more than 400 million m3 under a single contract.

Keywords: Town Water Supply and Sanitation; Water Supply and Sanitation Governance and Institutions; Water and Industry; Water Conservation; Urban Water Supply and Sanitation (search for similar items in EconPapers)
Date: 2008-01-01
New Economics Papers: this item is included in nep-agr, nep-com and nep-dev
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/wps4459.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:4459

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().

 
Page updated 2024-07-20
Handle: RePEc:wbk:wbrwps:4459