Efficiency in the Consolidation of the Italian Water Sector

Despite since the mid-90s the regulation has encouraged horizontal and vertical bundling, the Italian water and sewerage industry is still largely fragmented. This work investigates the potential benefits of the process of consolidation, relying on realistic ex-ante merger hypotheses. A parametric m...

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Bibliographic Details
Published in:Water resources management 2017-06, Vol.31 (8), p.2447-2463
Main Authors: Abrate, Graziano, Bruno, Clementina, Erbetta, Fabrizio, Fraquelli, Giovanni, Giolitti, Anna
Format: Article
Language:English
Subjects:
Acquisitions & mergers
Atmospheric Sciences
Bundling
Civil Engineering
Consolidation
Earth and Environmental Science
Earth Sciences
Efficiency
Environment
Geotechnical Engineering & Applied Earth Sciences
Hydrogeology
Hydrology/Water Resources
Sewage
Sewer systems
Sewerage
Water management
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Summary:Despite since the mid-90s the regulation has encouraged horizontal and vertical bundling, the Italian water and sewerage industry is still largely fragmented. This work investigates the potential benefits of the process of consolidation, relying on realistic ex-ante merger hypotheses. A parametric methodology is used to implement the Bogetoft and Wang 2005 ’s decomposition of potential gains from mergers (J Prod Anal 23:145–171). When looking at strictly technological aspects, results do not provide univocal evidence in favor or against merger strategies, recommending a case-by-case approach in evaluating real merger projects. Moreover, the largest potential gains are due to managerial rather than technological inefficiency, thus their effective ex-post attainment ultimately depend on the ability to tackle the change and on political will.
ISSN:0920-4741
1573-1650
DOI:10.1007/s11269-016-1376-9