Productivity and price performance in the privatized water and sewerage companies of England and Wales

David S. Saal*, David Parker

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

After its privatization in 1989, the water and sewerage industry of England and Wales faced a new regulatory régime and implemented a substantial capital investment program aimed at improving water and environmental standards. A new RPI + K regulatory pricing system was designed to compensate the industry for its increased capital costs, encourage increased efficiency, and maintain fair prices for customers. This paper evaluates how successful privatization and the resulting system of economic regulation has been. Estimates of productivity growth, derived with quality adjusted output indices, suggest that despite reductions in labor usage, total factor productivity growth has not improved since privatization. Moreover, total price performance indices reveal that increases in output prices have outstripped increases in input costs, a trend which is largely responsible for the increase in economic profits that has occurred since privatization. * We would like to thank Emmanuel Thanassoulis, Joshy Easaw, Jim Love, John Sawkins, and an anonymous referee for helpful comments on earlier drafts of this paper. The usual disclaimer applies.

Original languageEnglish
Pages (from-to)61-90
Number of pages30
JournalJournal of Regulatory Economics
Volume20
Issue number1
DOIs
Publication statusPublished - Dec 2001

Fingerprint

Productivity
England
Wales
Privatization
Water
Industry
Economic profit
Costs
Pricing
Economic regulation
Referees
Labor
Capital investment
Environmental standards
Productivity growth
Draft
Capital cost
Performance index
Total factor productivity growth
Fair price

Keywords

  • water and sewerage industry
  • England
  • Wales
  • capital investment program
  • water standards
  • environmental standards
  • pricing system
  • capital costs
  • privatization
  • economic regulation

Cite this

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Productivity and price performance in the privatized water and sewerage companies of England and Wales. / Saal, David S.; Parker, David.

In: Journal of Regulatory Economics, Vol. 20, No. 1, 12.2001, p. 61-90.

Research output: Contribution to journalArticle

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