Evaluating the water sector in Italy through a two stage method using the conditional robust nonparametric frontier and multivariate adaptive regression splines

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Abstract

The aim of this paper is to assess the efficiency of the integrated water service in Italy in recent years, through a robust and flexible methodology. This paper, from a methodological point of view, enhances a "two stage" method, based on ideas suggested by Florens and Simar (2005), which estimates the efficiency frontier through conditional robust models and bypasses, at the same time, the choice of a specific functional form in the second stage; the MARS (Multivariate Adaptive Regression splines) method, in fact, provides for approximate production function using linear splines without any assumption of a functional form. Applying this specific two stage method, despite poor assumptions of the production function form, we provide an estimate for the Italian water companies; we have found spatial and dimensional patterns, especially in metropolitan vs. low density areas. © 2010 Elsevier B.V. All rights reserved.

Author-supplied keywords

  • Conditional oder-m efficiency
  • Multivariate adaptive regression splines
  • Productive frontier efficiency
  • Two stage methods
  • Water sector

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