Diakité, Daouda and Thomas, Alban (2013) Structure des coûts d’alimentation en eau potable : une analyse sur un panel d’unités de production ivoiriennes. Recherches Économiques de Louvain, 79 (1). pp. 83-114.

Abstract

This paper analyzes the structure of water supply costs in Côte d’Ivoire municipalities using a panel of water utilities. Considering water utilities as multi-output monopolies providing two goods (billed water and lost water), we estimate a multi-output translog cost function using duality between the production and cost functions. We compute several measures of return to reveal that at the mean level, these water utilities operate with a constant return to scale. However, when we rank our production units by size using various criteria, it is clearly more profitable for the water operator to increase its production and connections for most small and medium utilities. Moreover, the presence of significant economies of scope reveals that up to a point, the jointly production of the two goods is more beneficial than improving network return. Finally, the estimated marginal cost at the mean level is higher than the marginal prices of the lowest levels in the pricing system.