Local Government Control and Efficiency of the Water Industry: An Empirical Analysis of Water Suppliers in East Germany

Peter Haug

No 3/2007, IWH Discussion Papers from Halle Institute for Economic Research (IWH)

Abstract: The paper deals with the effects of local governments' interference with business affairs of publicly owned utilities. A partial model is presented to illustrate the consequences of "democratic control" for the public managers' effort and the efficiency of local public production. To check the theoretical results empirically, a two-stage data envelopment analysis (DEA) is carried out for a sample of East German water suppliers. The organisational form is used as a measure for the degree of municipal control. The results of the OLS- and Tobit regression indicate an efficiency-enhancing effect of organisational forms with less distinctive control options for local politicians.

Keywords: efficiency; water industry; local governments; data envelopment analysis (search for similar items in EconPapers)
JEL-codes: D73 L32 L95 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:iwhdps:iwh-3-07

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