Do ownership and size affect the performance of water utilities? evidence from Estonian municipalities

Peeter Peda, Giuseppe Grossi, Margo Liik

Research output: Contribution to journalArticlepeer-review

32 Citations (Scopus)

Abstract

Concerns regarding rising water and sewerage prices have generated a renewed interest in measuring and assessing water utility performance. An efficiency analysis can serve as a basis for price setting decisions. This article examines the influence of ownership structure and corporate size on the efficiency of Estonian water companies, and assesses the empirical efficiency gaps through the lens of corporate governance and natural monopoly theories. To assess efficiency and the influence of ownership and corporate size on efficiency, we use a Data Envelopment Analysis and truncated regression with maximum likelihood estimation as well as an ANOVA test. The study sample consists of 43 water utilities, serving more than 68% of the Estonian population. One main finding of the study reveals that ownership structure does not affect the efficiency of Estonian water utilities, while efficiency does increase with corporate size: large water utilities outperform small utilities. An additional conclusion is that the Estonian water sector is too fragmented.

Original languageEnglish
Pages (from-to)237-259
Number of pages22
JournalJournal of Management and Governance
Volume17
Issue number2
DOIs
Publication statusPublished - 2013

Swedish Standard Keywords

  • Business Administration (50202)

Keywords

  • Data envelopment analysis
  • Efficiency
  • Local government
  • Ownership
  • Size
  • Water utility

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