This research investigated merger and consolidation
in the water industry to gain insight into the causes
driving these activities. An economic model was developed
to analyze data from more than 6,000 mergers of
community water systems in six midwestern states. The
model considered such variables as number of water
quality and monitoring violations, whether or not a
system already purchased water, and system ownership
(public versus private).
Small water systems that were acquired were more
likely to have violated the Safe Drinking Water Act
(SDWA). Publicly owned firms were less likely to be
acquired, perhaps because of the high political costs
associated with selling government assets. Systems that
purchased water and thus already had interconnected
infrastructure also were more likely to merge.
Merger has not been fully explored as a mechanism
to increase regulatory compliance. These findings
suggest that policies that lower the political,
regulatory, and physical cost of mergers may help
make it a more effective tool to boost SDWA
compliance. Includes 28 references, tables.
| Edition : | Vol. 100 - No. 11 |
| Number of Pages : | 10 |
| Published : | 11/01/2008 |
