Efficiency of Brazilian public and private water utilities

Abstract

This paper compares cost efficiencies of Brazilian public and private companies of water supply. To measure efficiency a Cobb-Douglas stochastic cost frontier model including technical effects is estimated by maximum likelihood to a panel of Brazilian firms for the period 2002-2004. The statistical results indicate that there is evidence that public firms are more efficient although the difference in efficiency is declining over time. Overall the system of water and sewerage supply is becoming more efficient over time.