Costs and structure of technology in the Italian Water Industry

This paper analyses from an empirical point of view the technology underlying the Water industry. Firstly, we study the impact of environmental and quality factors on the production process. Secondly, different functional forms are analysed in order to represent the technology. Overall results show that the coefficient of hedonic variables are significant and that the best functional form is the transcendental logarithmic one. Finally, evidence on return to scale depends on the functional form adopted and on the inclusion of hedonic variables.