Abstract
The purpose of this paper is the evaluation of vari ous profit drivers such as price changes, productivity changes and quality levels on the financial performance of the Water and Sewerage Companies (WaSCs) over time in the case when the number of observations is limited. We thereby follow Maziotis , Saal and Thanassoulis (2012) approach and extend it by measuring the impact of e xogenous factors such as drinking water and sewerage treatment quality on profitabili ty, productivity and price performance measures. The results suggest that whil e quality improvements have significantly contributed to the productivity perfo rmance of the WaSCs, they have also contributed negatively to their price performa nce. Overall, after 2000 steady reduction in average price performance, gains in pr oductivity and stable economic profitability were apparent. This trend indicates O fwat's policy on passing productivity benefits to consumers, and sustaining stable profitability than it was in earlier regulatory periods. This technique is of gr eat interest for both regulators and regulated companies to better identify the sources of profit variation and aid them in evaluating both the effectiveness of a regulatory p rice cap scheme and the performance of the regulated companies, when the sample size is extremely limited.
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