Simon Porcher

Efficiency in the public and private French water utilities: prospects for benchmarking

This article uses a data envelopment analysis (DEA) and a stochastic frontier analysis (SFA) to assess the relative technical efficiency of 177 decision-making units in the French water supply sector in 2009. Water utilities can be directly managed by the local authorities or contracted out and then managed by a private operator. The use of a three-stage model mixing DEA and SFA enables us to dissociate managerial inefficiencies from the structural inefficiencies and statistical noise. After having taken the environmental variables into account, we find that private management are on average slightly less efficient than public management. An explanation to this performance gap can be different resource management.

Efficiency and Equity in Two-Part Tariffs: The Case of Residential Water Rates

As first noticed by Coase (1946), a standard result in utility regulation is that efficiency requires two-part tariffs with marginal prices set to marginal costs and fixed fees equal to each customer’ s share of fixed costs. Residential water customers in France face marginal prices for water that average about 8% more than marginal costs. Under price elasticity estimates that are consistent with previous results in the literature, efficiency costs represent around 8 million euros of welfare losses for 2008. Even though the impact is fairly small, current price schedules are an important pre-existing distortion which should be considered when evaluating current taxes aimed at addressing external costs. Moreover, efficiency gains from reformed tariffs could be used to fund water assistance programs focused on financially stressed households.

Towards a Stakeholder Society: Stakeholder Theory vs Theory of Civil Society

Associating the concept of civil society with stakeholder theory has become a common practice. The point of view put forward here attribute paternity of the stakeholder theory essentially to Freeman as a strategic framework for business studies and practices (1981, 1983, 1984, 1985, 1987, 2001, 2004), as a strong framework for political and moral philosophy (1988, 1994, 1998), as an inescapable framework for business ethics (2000). In order to take into account the advancement bringing by Freeman, the intention of this article is to demonstrate the degree to which stakeholder theory can be considered as a theory of civil society, which in turn is a theory of business. The argument will be based on the following points: Stakeholder theory occupies an intermediate position between strategic management and political philosophy in that it presents a new form of sovereignty, the sovereignty of big business; Stakeholder theory is a strategic theory; whether it legitimises, relativises or neutralises the sovereignty of the firm, it conceptualises and situates it in relation to other models; Stakeholder theory can be understood as a theory of civil society for the 21st century but it cannot be a substitute for a civil society theory devised in the 19th century; Stakeholder theory can thus be considered as affording a strategic perspective that, although somewhat unfamiliar, serves as the foundation of business ethics.

The determinants of margins in French retail gasoline markets

When studying oligopolies, a tension exists between models supporting tacit collusion and those supporting the noncollusive behaviour of firms. Using a panel on retail fuel margins in France over more than 20 years, we find mitigated evidence of collusive behaviour in the retail gasoline industry. On the one hand, we find lower margins when demand is expected to increase in the next period, which is a standard prediction for the noncooperative models. On the other hand, we also find evidence of tacit collusion as margins respond to input cost changes in the manner that the tacit collusion models predict: margins decline when the expected marginal cost increases. Our results leave open the question of collusion in the retail gasoline market.

Impact of regulation on English and Welsh water-only companies: an input-distance function approach

The assessment of productivity change over time and its drivers is of great significance for water companies and regulators when setting urban water tariffs. This issue is even more relevant in privatized water industries, such as those in England and Wales, where the price-cap regulation is adopted. In this paper, an input-distance function is used to estimate productivity change and its determinants for the English and Welsh water-only companies (WoCs) over the period of 1993–2009. The impacts of several exogenous variables on companies’ efficiencies are also explored. From a policy perspective, this study describes how regulators can use this type of modeling and results to calculate illustrative X factors for the WoCs. The results indicate that the 1994 and 1999 price reviews stimulated technical change, and there were small efficiency gains. However, the 2004 price review did not accelerate efficiency change or improve technical change. The results also indicated that during the whole period of study, the excessive scale of the WoCs contributed negatively to productivity growth. On average, WoCs reported relatively high efficiency levels, which suggests that they had already been investing in technologies that reduce long-term input requirements with respect to exogenous and service-quality variables. Finally, an average WoC needs to improve its productivity toward that of the best company by 1.58%. The methodology and results of this study are of great interest to both regulators and water-company managers for evaluating the effectiveness of regulation and making informed decisions.

Correlation evidence in the dynamics of agricultural commodity prices

The article studies the correlation structures of a large panel of agricultural commodities prices between January 1990 and February 2014. We use a various collection of mathematical and statistical methodologies (estimated correlation matrix and principal component analysis) to capture these correlations. Our results show that there exist different degrees of correlation between commodities. We also demonstrate, through data mining analysis, that there are hidden correlations between some commodities. Indeed, some commodities’ price behaviours are very similar in trend. Our results contribute to a better understanding of agricultural prices’ behaviours by producers, investors and market intermediaries. The results contribute to a more efficient strategic asset allocation process within agricultural markets.

Fuel taxes and consumer behaviour: a Markov-switching approach

Fuel taxes can be employed to correct externalities associated with automobile use and raise government revenue. The general understanding of the efficacy of existing taxes is largely based on empirical analyses of consumer responses to fuel price changes. In this paper, we directly examine how fuel taxes, as distinct from tax-exclusive fuel prices, affect fuel demand. To do so, we use a Markov-switching approach on monthly observations of French fuel prices from 1983 to 2013. Our analysis reveals that consumers respond significantly faster to increases in fuels taxes than to increases in taxexclusive fuel prices. This result raises questions about our understanding of the efficacy of existing fuel taxes and of the optimal tax to achieve the various goals for which they are implemented.

Jumps and volatility dynamics in agricultural commodity spot prices

ABSTRACT The spot commodities market exhibits both extreme volatility and price spikes, which lead to heavy-tailed distributions of price change and autocorrelation. This article uses various Lévy jump models to capture these features in a panel of agricultural commodities observed between January 1990 and February 2014. The results show that Levy jump models outperform the continuous Gaussian model. Our results prove that assuming a constant volatility or even a deterministic volatility and drift structure of agricultural commodity spot prices is not realistic and is less efficient than the stochastic assumption. The findings demonstrate an interesting correlation between volatility and jumps for a given commodity i, but no relationship between the volatility of commodity i and the probability of jumps of commodity j.

RSE, parties prenantes et événements rares : le cas de deux marées noires

Dans cet article, nous utilisons le cadre de la theorie des parties prenantes pour analyser et confronter la strategie RSE de deux entreprises petrolieres qui font face a des marees noires. La reussite dans la gestion de l’evenement rare depend autant du dialogue avec les parties prenantes que du cadre reglementaire dans lequel evolue l’entreprise. Nous en deduisons des elements de strategie RSE pour les entreprises et des voies de reforme de la regulation de l’environnement.