Skip to main content
SpringerLink
Log in

Cost analysis of water utilities: A goodness-of-fit approach

  • Articles
  • Published:
Atlantic Economic Journal Aims and scope Submit manuscript

Abstract

The behavior of privately owned and publicly owned water utilities is examined by calculating the percentage difference between the observed cost and the optimum cost consistent with the Weak Axiom of Cost Minimization for each individual water utility. It allows for a comprehensive analysis of nearly optimizing behavior of economic units as opposed to the conventional analysis of exact optimizing behavior. The empirical results provide evidence that private water utilities are more efficient than public water utilities.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Afriat, S. "Efficiency Estimates of Production Functions,"International Economic Review, 1972, pp. 568–98.

  • Akerlof, G.; Yellen, J. "Can Small Deviations from Rationality Make Significant Differences to Economic Equilibria?"American Economic Review, 1985, pp. 708–20.

  • Byrnes, P.; Grosskopf, S.; Hayes, K. "Efficiency and Ownership: Further Evidence,"Review of Economics and Statistics, 1986, pp. 337–41.

  • Cochrane, J. "The Sensitivity of Tests of Intertemporal Allocation of Consumption to Near-Rational Alternatives,"American Economic Review, 1989, pp. 319–37.

  • Crain, W. M.; Zardkoohi A. "A Test of the Property-Rights Theory of the Firm: Water Utilities in the U.S.,"Journal of Law and Economics, 1978, pp. 395–408.

  • Diewert, E.; Parkan C. "Test for Consistency of Consumer Data and Nonparametric Index Numbers,"Journal of Econometrics, 1985, pp. 127–47.

  • Feigenbaum, S.; Teeples R. "Public Versus Private Water Delivery: A Hedonic Cost Approach,"Review of Economics and Statistics, 1983, pp. 672–8.

  • McGuire, R. A.; Obsfeldt R. "Public Versus Private Water Delivery: A Critical Analysis of A Hedonic Cost Approach,"Public Finance Quarterly, 1986, pp. 339–50.

  • Teeples, R.; Feigenbaum S.; Glyer, D. "Public Versus Private Water Delivery: Cost Comparisons,"Public Finance Quarterly, 1986, pp. 351–66.

  • Teeples, R.; Glyer D. "Cost of Water Delivery Systems: Specification and Ownership Effects,"Review of Economics and Statistics, 1987, pp. 399–408.

  • Varian, H. "The Nonparametric Approach to Production Analysis,"Econometrica, 1984, pp. 579–97.

  • __ "Nonparametric Analysis of Optimizing Behavior with Measurement Error,"Journal of Econometrics, 1985, pp. 445–58.

  • __ "Goodness-of-Fit in Optimizing Models,"Journal of Econometrics, 1990, pp. 125–40.

Download references

Author information

Authors and Affiliations

  1. University of Nevada, USA

    Kambiz Raffiee, Rangesan Narayanan, Thomas R. Harris & David Lambert

  2. Department of Public Works, USA

    John M. Collins

Authors
  1. Kambiz Raffiee
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Rangesan Narayanan
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Thomas R. Harris
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. David Lambert
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. John M. Collins
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Raffiee, K., Narayanan, R., Harris, T.R. et al. Cost analysis of water utilities: A goodness-of-fit approach. Atlantic Economic Journal 21, 18–29 (1993). https://doi.org/10.1007/BF02302240

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF02302240

Keywords

Search

Navigation