Is a little sunshine all we need? On the impact of sunshine regulation on profits, productivity and prices in the Dutch drinking water sector

Kristof De Witte, David S. Saal

Research output: Contribution to journalArticle

Abstract

This paper analyzes the performance of Dutch drinking water utilities before and after the introduction of sunshine regulation, which involves publication of the performance of utilities but no formal price regulation. By decomposing profit change into its economic drivers, our results suggest that, in the Dutch political and institutional context, sunshine regulation was effective in improving the productivity of publicly organised services. Nevertheless, while sunshine regulation did bring about a moderate reduction in water prices, sustained and substantial economic profits suggest that it may not have the potential to fully align output prices with economic costs in the long run. In methodological terms, the DEA based profit decomposition is extended to robust and conditional non-parametric efficiency measures, so as to account better for both uncertainty and differences in operating environment between utilities.
Original languageEnglish
Pages (from-to)219-242
Number of pages24
JournalJournal of Regulatory Economics
Volume37
Issue number3
DOIs
Publication statusPublished - Jun 2010

Bibliographical note

Creative Commons Attribution (CC BY)

Keywords

  • regulation
  • drinking water utilities
  • profit decomposition
  • data envelopment analysis

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