scholarly journals Economies of scale in the water sector: a survey of the empirical literature

2011 ◽  
Vol 1 (3) ◽  
pp. 179-193 ◽  
Author(s):  
Gustavo Ferro ◽  
Emilio J. Lentini ◽  
Augusto C. Mercadier
Keyword(s):  
Economies Of Scale ◽  
Universal Access ◽  
Unit Cost ◽  
Returns To Scale ◽  
Empirical Literature ◽  
Water Sector ◽  
Unit Costs ◽  
Proportional Change ◽  
Constant Returns To Scale ◽  
The Relationship

The issue of the most favorable size and optimal industry structure in the water sector is a relevant topic in many countries, due to fragmentation of the water sector and the key role played by municipalities. Important debates are taking place worldwide about how to provide universal access to the water supply and offer an efficient service. Regarding efficiency, the possibility of exploiting economies of scale would imply better resource allocation, the potential for lower water charges, and greater geographical coverage. By surveying the empirical research from different parts of the world, we aim to shed some light on the topic of economies of scale, and to provide a synthesis of the literature. We also aim to determine whether there is a tradeoff between centralization and decentralization. Our survey shows that, for several countries, variations in efficiency of water provision due to economies of scale do exist. Increases in efficiency related to economies of scale are found for populations in the range of 100,000 to 1 million people served. For larger populations, volume- or density-constant returns to scale are observed, followed by decreasing returns to scale; the reverse occurs for smaller values, suggesting that cost savings are derived from consolidation of providers. [Returns to scale refer to changes in output resulting where all inputs increase by a constant factor. If output increases by that same proportional change, then there are constant returns to scale. If output increases by less than that proportional change, there are decreasing returns to scale. If output increases by more than that proportional change, there are increasing returns to scale. Returns to scale is a technological phenomenon, due to the relationship between inputs and outputs in the production function. Economies of scale refer to reductions in unit cost as the scale of production increases. Diseconomies of scale are the opposite: increasing in unit costs as the scale of production increases. Scale changes mean a proportional increase in all factors of production. Economies of scale are a economical phenomenon, due to the relationship between unit costs and the level of production.]

Marginal assessment of the cost and benefits of aphasia treatment: Evidence from community-based telerehabilitation treatment for aphasia

2021 ◽  
pp. 1357633X2098277
Author(s):  
Molly Jacobs ◽  
Patrick M Briley ◽  
Heather Harris Wright ◽  
Charles Ellis
Keyword(s):  
Cost Effectiveness ◽  
Economies Of Scale ◽  
Reference Group ◽  
Unit Cost ◽  
Community Based ◽  
Face To Face ◽  
Conduction Aphasia ◽  
Aphasia Treatment ◽  
The Cost ◽  
The Relationship

Introduction Few studies have reported information related to the cost-effectiveness of traditional face-to-face treatments for aphasia. The emergence and demand for telepractice approaches to aphasia treatment has resulted in an urgent need to understand the costs and cost-benefits of this approach. Methods Eighteen stroke survivors with aphasia completed community-based aphasia telerehabilitation treatment, utilizing the Language-Oriented Treatment (LOT) delivered via Webex videoconferencing program. Marginal benefits to treatment were calculated as the change in Western Aphasia Battery-Revised (WAB-R) score pre- and post-treatment and marginal cost of treatment was calculated as the relationship between change in WAB-R aphasia quotient (AQ) and the average cost per treatment. Controlling for demographic variables, Bayesian estimation evaluated the primary contributors to WAB-R change and assessed cost-effectiveness of treatment by aphasia type. Results Thirteen out of 18 participants experienced significant improvement in WAB-R AQ following telerehabilitation delivered therapy. Compared to anomic aphasia (reference group), those with conduction aphasia had relatively similar levels of improvement whereas those with Broca’s aphasia had smaller improvement. Those with global aphasia had the largest improvement. Each one-point of improvement cost between US$89 and US$864 for those who improved (mean = US$200) depending on aphasia type/severity. Discussion Individuals with severe aphasia may have the greatest gains per unit cost from treatment. Both improvement magnitude and the cost per unit of improvement were driven by aphasia type, severity and race. Economies of scale to aphasia treatment–cost may be minimized by treating a variety of types of aphasia at various levels of severity.

Technical efficiency drivers for the Italian water industry

2010 ◽  
pp. 87-103
Author(s):  
Tiziana Caliman ◽  
Paolo Nardi
Keyword(s):  
Technical Efficiency ◽  
Business Strategy ◽  
Economies Of Scale ◽  
Negative Impact ◽  
Returns To Scale ◽  
Geographical Location ◽  
Parametric Models ◽  
Water Industry ◽  
Component Distribution ◽  
Constant Returns To Scale

The aim of this work is to introduce a first analysis concerning the relevance that ownership and financial structure, but also market dimension and business portfolios, have on the technical efficiency of Italian water utilities. Even though scholars have provided information on the influence of some dimensional or geographical variables, mono-utility character or ownership on efficiency, no paper, to the best of our knowledge, has ever considered the presence of all these hedonic variables as efficiency shifters or drivers. Antonioli and Filippini (2001) have not included ownership; Benvenuti and Gennari (2008) have included ownership and multi-utility strategy, but excluded the geographical dimension; Fabbri and Fraquelli (2000) have not included geographical location, business strategy or ownership; furthermore, most analyses of the Italian water sector have focused on the ATO level (investments, labour costs) and not on utility performances. We have estimated four heteroskedastic stochastic production frontiers: two different parametric models, where the hedonic dummy mono is either in the model as an additional variable or it is used to parameterize the variance of the inefficiency term; two competitive statistical formulations have also been introduced to specify the inefficiency component distribution, that is, the half normal and the exponential distributions. The most important findings of this paper can be summarized as follows. The labour, capital and other input elasticities are always highly significant, positive and quite stable in all the performed models, as expected for a well-behaved production function. The main results show that the mono-business strategy is not efficient; at the same time, operating water and sewerage together implies higher efficiency than water- only management. Theoretically, the population density can have an ambiguous effect on efficiency: on one hand, it could be more expensive to serve dispersed customers, but, on the other, it could generate congestion problems. It could be argued that the second effect prevails, therefore a higher density is accompanied by a higher inef- ficiency. The analysis points out that the variance of the idiosyncratic term is a function of the size of the firm, which is measured as the number of connected properties; the null hypothesis, that the firms use a constant returns-to-scale technology, has also been rejected. Considering the 1994 reform, it is possible to state that the integration of water and sewerage has substantially been positive; at the same time, the economies of scale and the ambiguity of density justify the division into provincial basins. The role of the private sector in the water industry, in agreement with previous literature, has neither a positive nor a negative impact on efficiency and ownership is simply not influent [obviously the quality of service should be considered, although the same indifference seems to emerge (Dore et al., 2001)]. Southern Italy suffers from a higher degree of inefficiency (also recently confirmed by Svimez, 2009), and this is probably the most important issue that has to be dealt with, because of the risks of drought and watering bans in those Regions during summer.

A Note on the Relationship among the Shape of the Production Possibility Frontier, ‘Returns to Scale’ and ‘Returns to Factors’ under Cobb–Douglas Production Function

2016 ◽  
Vol 4 (2) ◽  
pp. 173-184 ◽  
Author(s):  
Merter Mert
Keyword(s):  
Production Function ◽  
Economies Of Scale ◽  
Returns To Scale ◽  
Scale Economies ◽  
Production Possibility ◽  
Production Possibility Frontier ◽  
The Relationship ◽  
Douglas Production Function

The purpose of this study is to examine relationship among returns to scale, returns to factors and the shape of the production possibility frontier under Cobb–Douglas production function. The study asks the following question: How can production possibility frontier be drawn (a) if returns to scale are constant, increasing and decreasing and (b) if returns to factors are constant, increasing and decreasing? The main finding of the study is as follows: When (a) returns to factors are constant or increasing or decreasing and (b) returns to scale (economies of scale internal to the firm) are constant or increasing or decreasing, the production possibility frontier can be bowed in or bowed out or be linear under certain conditions.

A Statistical Estimation of an Operating Cost Function for Municipal Refuse Collection

1976 ◽  
Vol 4 (1) ◽  
pp. 56-76 ◽  
Author(s):  
Harry M. Kitchen
Keyword(s):  
Economies Of Scale ◽  
Descriptive Analysis ◽  
Unit Cost ◽  
Operating Cost ◽  
Final Analysis ◽  
Factors Affecting ◽  
Refuse Collection ◽  
Unit Costs ◽  
Average Unit ◽  
Municipal Refuse

This study is both an attempt to isolate those factors which contribute to the variation in average unit costs of collecting refuse and an attempt to examine the extent to which economies of scale exist. The model employed states that the average per capita cost to a municipality is a function of five categories of factors. Within the categories, a number of variables were postulated to have some significant effect on the per unit cost. However, the unavailability of some data and lack of variation in other data reduced the actual model so that in the final analysis ten variables were found to significantly affect costs. The results from the sample indicated that average costs increased in municipalities with populations of up to 324,000 and only began to fall when cities exceeded this size. A number of other variables exerted in one direction or another a significant effect on costs. A further statistical analysis of this sort may prove to be rather fruitless. What is perhaps needed is a more in-depth descriptive analysis of the institutional implications of the factors affecting the whole operation of refuse collection.

scholarly journals Examining the economies of scale of water and sewage utilities in the urban sector: the case of Israel

Water Policy ◽  
2016 ◽  
Vol 19 (2) ◽  
pp. 257-270 ◽  
Author(s):  
Doron Lavee ◽  
Sefi Bahar
Keyword(s):  
Economies Of Scale ◽  
Returns To Scale ◽  
Water Utilities ◽  
Distinct Advantage ◽  
Optimal Size ◽  
Urban Water ◽  
Water Production ◽  
Translog Cost Function ◽  
Water Sector ◽  
Urban Sector

This study applies econometric tools to examine the economies of scale of the water and sewage utilities corporation (utilities) in the urban sector in Israel, and to find whether reducing the number of utilities will maximize efficiency in the urban water sector. Using an econometric analysis of an elasticity Translog cost function, which allows the estimation of returns to scale, the authors examined the optimal size for water and sewage utilities in Israel, based on panel data of 51 utilities. According to the study's results, there is a distinct advantage of economies of scale in Israel's water utilities, and the current distribution of the urban water sector in Israel is characterized by inefficiency and high cost. The results indicate that reducing the number of utilities will achieve an increase in water quantities by utility, and the costs of water production will decline due to economies of scale.

The Rules of Derived Demand when the Firm is a Monopolist

1975 ◽  
Vol 41 (04) ◽  
pp. 379-387
Author(s):  
R.W. Latham ◽  
D.A. Peel
Keyword(s):  
Production Function ◽  
Economies Of Scale ◽  
Scale Parameter ◽  
Returns To Scale ◽  
Elasticity Of Demand ◽  
Competitive Industry ◽  
Competitive Behaviour ◽  
Polar Opposite ◽  
Derived Demand ◽  
Constant Returns To Scale

In a recent paper Andrieu [l] derived the rules of derived demand for a factor in a perfectly competitive industry when the industry’s production function was homogeneous but not necessarily of degree one. In order to achieve compatibility with competitive behaviour economies of scale were assumed to be external to each firm but internal to the industry. Within this framework he showed that Marshall’s third rule concerning relative shares was modified and, further, proposed a ‘ fifth law ’ with respect to the returns to scale parameter : ‘ Other things being equal, an increase in the returns to scale will make the derived demand for a factor more (less) elastic if the demand for output is elastic (inelastic). The purpose of this note is to examine a model which is the polar opposite to that considered by Andrieu. Here the firm is assumed to be the industry i.e. a monopolist. Non-constant returns to scale are introduced by assuming that the production function is homogeneous of an arbitrary degree. The analysis is not completely general since both the price elasticity of demand and the elasticity of supply of the second factor are assumed to be constant. However within this model it is shown that not only are Marshall’s second and third laws modified but also Andrieu’s fifth law.

Cross-Corridor Comparison of Operating Costs for High-Speed Ground Transportation

1997 ◽  
Vol 1584 (1) ◽  
pp. 8-16
Author(s):  
Duncan W. Allen
Keyword(s):  
High Speed ◽  
Economies Of Scale ◽  
Unit Cost ◽  
The United States ◽  
Maintenance Cost ◽  
Traffic Density ◽  
Trip Length ◽  
Market Growth ◽  
Passenger Traffic ◽  
Unit Costs

The U.S. Department of Transportation’s commercial feasibility study (CFS) of high-speed ground transportation (HSGT) included a detailed estimate of operating and maintenance (O&M) costs for eight HSGT technologies across nine intercity corridors in the United States. The number of cases examined in detail provides a wealth of information that can support general conclusions about HSGT O&M costs under the normative assumptions of the CFS. These conclusions are expressed primarily in terms of six parameters: the nominal maximum authorized speed of the technology; revenue seat-miles; revenue seat-hours; corridor passenger traffic density; specific trip length; and corridor length. The total O&M unit costs per passenger-mile estimated for the CFS are related to these parameters: It is concluded that most of the variation among operating and maintenance cost estimates can be explained by a set of four descriptive parameters in conjunction with a choice of technology option; for a given corridor length and amount of transportation provided, the total O&M costs for other than maintenance of way increase only modestly with higher speeds and more advanced technologies; maintenance of way costs exhibit economies of scale but can vary widely among corridors, depending on the ownership and operating arrangement for the corridor, the lowest unit-cost option for a corridor is strongly determined by traffic density and by the potential for market growth with increased operating speeds; the importance of specific trip length relative to passenger traffic density increases with density; and generalizations drawn from CFS results in terms of corridor length or density alone do not necessarily apply to other corridors, particularly when one or more of the other four parameters differ.

Trade, Immigration, and Cross‐Border Investment

2009 ◽  
Author(s):  
Ronald Rogowski
Keyword(s):  
Economies Of Scale ◽  
Returns To Scale ◽  
Individual Factor ◽  
Cross Border ◽  
Marginal Returns ◽  
Constant Returns To Scale

This article discusses the implications of four models related to trade, immigration, and cross-border investment. These four models are: Hecksher-Ohlin, Samuelson-Jones and Ricardo-Viner, neo-Ricardian, and Economies of Scale. The first three models assume constant returns to scale, but all models make the conventional assumption of diminishing marginal returns to any individual factor. The article discusses each model in detail, focusing on trade in products and cross-border migration and investment.

scholarly journals Study on Urban Efficiency Measurement and Spatiotemporal Evolution of Cities in Northwest China Based on the DEA–Malmquist Model

2019 ◽  
Vol 11 (2) ◽  
pp. 434 ◽  
Author(s):  
Jun Yin ◽  
Qingmei Tan
Keyword(s):  
Technical Efficiency ◽  
Economies Of Scale ◽  
High Efficiency ◽  
Returns To Scale ◽  
Northwest China ◽  
Scale Efficiency ◽  
Spatiotemporal Evolution ◽  
Capital Cities ◽  
Low Efficiency ◽  
Constant Returns To Scale

Urban efficiency can effectively measure the management and allocation level of urban factor inputs. Based on the data of 30 prefecture-level cities in Northwest China from 2006 to 2015, urban efficiency is measured by data envelopment analysis (DEA). Then the spatiotemporal evolution rule is identified by Malmquist model. The results illustrate that the overall average urban efficiency of cities in Northwest China each year from 2006 to 2015 was at the low level. Only Jiayuguan, Yulin, Yan’an, and Karamay reached the high average urban efficiency, while Dingxi, Pingliang, Guyuan, Shangluo, Tianshui, Longnan, and Baiyin were at the inefficient level. Most cities in Northwest China were still in the “growing” stage of increasing returns to scale. The scale of urban investment was relatively insufficient, and economies of scale had not yet formed. Cities with decreasing returns to scale were mainly distributed in the capital cities and the central and sub-central cities of Guanzhong-Tianshui Economic Zone with relatively abundant urban resources and capital. Cities with constant returns to scale were mainly distributed in four cities including Yan’an, Yulin, Jiayuguan, and Karamay with high efficiency. The overall comprehensive efficiency, technical efficiency, and scale efficiency of cities in Northwest China were not only low, but also showing a downward trend. The overall progress of urban technology had failed to make up for the shortfall caused by low efficiency, resulting in total factor productivity (TFP) decreasing by 0.5%. Therefore, the cities in Northwest China should continuously improve their technical efficiency and scale efficiency, and ultimately enhance the comprehensive efficiency.

Truck dispatching and minimum emissions earthmoving

2014 ◽  
Vol 3 (2) ◽  
pp. 170-186 ◽  
Author(s):  
Alireza S. Kaboli ◽  
David G. Carmichael
Keyword(s):  
Unit Cost ◽  
Sensitivity Analyses ◽  
Content Type ◽  
Unit Costs ◽  
Road Project ◽  
The Relationship ◽  
Numerical Case Study ◽  
Practical Implications ◽  
Truck Allocation

Purpose – The dispatching of trucks in earthmoving and like operations is worthy of examination because of potential emission reductions and savings through the appropriate allocation of trucks to excavators and dump sites. The paper aims to discuss this issue. Design/methodology/approach – Truck dispatching is performed through linear programming (LP) and the effect of truck allocation on unit emissions and unit costs established. Number of trucks, unit cost and unit emissions are all considered as objective functions. A cut and fill operation on a road project provides a numerical case study. Findings – It is demonstrated analytically that the minimum unit emissions solution is the same as that for minimum unit cost. Numerical results from the case study, including sensitivity analyses on the underlying parameters, support this conclusion. Practical implications – The LP dispatching solution, based on minimizing truck numbers and unit costs, accordingly impacts the environment the least in terms of emissions. The paper's results will be of interest to those designing and managing earthmoving and like operations for production, cost and emissions. Originality/value – While LP has been used by others to examine optimum unit cost dispatching, this paper is original in examining the dispatching or truck allocation based on both unit cost and unit emissions, and showing the relationship between the optima for both.

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