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

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

37 Citations (Web of Science)

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
JournalJournal of Regulatory Economics
Volume37
Issue number3
DOIs
Publication statusPublished - Jun 2010

Keywords

  • Regulation
  • Drinking water utilities
  • Profit decomposition
  • Data Envelopment Analysis

Cite this