The paper shows how all regulatory methods applicable to the Italian water industry have problems that can only be addressed via a second-best rationale. The application a priori of either a wholly public or wholly private solution regardless of the characteristics of each case under examination appears less effective than any second-best solution. The last part of the work examines criticisms often made of yardstick competition, particularly as regards its supposed dependence on the specific econometric model adopted. The econometric analysis presented here demonstrates how this dependence is in reality far less evident than commonly suggested. The paper concludes with the view that yardstick competition-based regulation of tariffs would represent a significant step ahead in the regulation of the Italian water sector.
Il punto della situazione sulla regolazione del settore idrico in Italia
AMATO, AMEDEO ANTONIO
2007-01-01
Abstract
The paper shows how all regulatory methods applicable to the Italian water industry have problems that can only be addressed via a second-best rationale. The application a priori of either a wholly public or wholly private solution regardless of the characteristics of each case under examination appears less effective than any second-best solution. The last part of the work examines criticisms often made of yardstick competition, particularly as regards its supposed dependence on the specific econometric model adopted. The econometric analysis presented here demonstrates how this dependence is in reality far less evident than commonly suggested. The paper concludes with the view that yardstick competition-based regulation of tariffs would represent a significant step ahead in the regulation of the Italian water sector.
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