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PRIVATISATION AND EFFICIENCY IN THE UK WATER INDUSTRY: AN EMPIRICAL ANALYSIS *
Author(s) -
Hunt Lester C.,
Lynk Edward L.
Publication year - 1995
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/j.1468-0084.1995.mp57003006.x
Subject(s) - divestment , water industry , production (economics) , product (mathematics) , industrial organization , function (biology) , joint (building) , business , quality (philosophy) , water sector , economics , environmental economics , natural resource economics , water supply , environmental science , microeconomics , finance , environmental engineering , engineering , mathematics , architectural engineering , philosophy , geometry , epistemology , evolutionary biology , biology
The post‐privatisation structure of the UK water industry involves the separation of environmental services from other outputs previously produced under an integrated system by the publicly‐owned water authorities. This paper examines the extent to which the integrated authorities benefitted from joint production. Estimating a dynamic multi‐product cost function from pooled cross‐section, time‐series quality adjusted data drawn from the accounts of the water authorities for the period 1979/80–1987/88, prior to privatisation, significant elements of joint production are found. Divestiture of the industry, arguably justified on other criteria, implies the loss of substantial areas of cost complimentary.