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ABSTRACT
Interest in evaluating productivity changes in water companies has increased in recent years. In this paper, for the first time, we employ the Luenberger-Hicks-Moorsteen Productivity Indicator (LHMPI) to evaluate productivity changes in a sample of Chilean water companies from 2010 to 2016. Productivity change estimations obtained by both the Luenberger Productivity Indicator (LPI) and the LHMPI are compared. Moreover, both indicators were computed assuming constant and variable returns to scale technologies. The LHMPI estimates illustrate that productivity in Chilean water companies has slightly improved over the period studied due to the positive trend of outputs, whereas the inputs negatively contributed to productivity changes. Results from the empirical analysis enabled us to verify that the LHMPI and LPI (and their drivers) are statistically different. This conclusion illustrates that water regulators need to pay attention to the indicators used when assessing productivity changes in water companies.
Acknowledgements
The authors wish to acknowledge the financial assistance received from Conicyt through the program Redes Internacionales (REDI170223).
Supplementary material
Supplementary data can be accessed here.
Notes
1. If output increases by the same proportional change as input changes then there are constant returns to scale (CRS). Variable returns to scale (VRS) exist when an increase in input does not result in a proportional change in output (see more details in Cooper, Seiford, and Tone Citation2007).
2. On 27 July 2018, 1 US$ = 642 CLP, 1 € = 748 CLP.
3. On 2nd April the currency rate was 742 CLP = 1 EURO.