Journal of Productivity Analysis

, Volume 45, Issue 2, pp 215–228 | Cite as

Economies of scale in Peru’s water and sanitation sector

  • Augusto C. Mercadier
  • Walter A. Cont
  • Gustavo Ferro


This paper quantifies economies of scale in Peru’s water and sanitation (W&S) sector based on a five-year panel (2006–2010) that examines 39 water services providers. Our findings highlight the lack of economies of scale in the Peruvian W&S sector as a whole. Cost savings are possible through water volume increases (Economies of Production Density) and a higher provision density (Economies of Customer Density), but not via an increase in the number of served municipalities (overall Economies of Scale). Some agglomerations are possible, yielding cost reductions of up to 9 %.


Economies of scale Water and sanitation Peru Econometrics 

JEL Classification

D61 L5 L95 



We thank the thorough review of two anonymous referees. An early version of this paper was part of Augusto Mercadier’s MA Dissertation at Universidad Nacional de La Plata, under Walter Cont’s supervision. It was also presented at the annual congress of the “Asociación Argentina de Economía Política”. We thank Ricardo Bebczuk, Federica Brenner, Ariel Casarin, Emilio Lentini, Inés Asís del Valle, Joaquín Coleff, Mariana Marchionni, and Guillermo Cruces. The usual disclaimer applies.


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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  • Augusto C. Mercadier
    • 1
  • Walter A. Cont
    • 2
  • Gustavo Ferro
    • 3
  1. 1.ERAS and Universidad Nacional de La PlataBuenos AiresArgentina
  2. 2.FIEL and Universidad Nacional de La PlataBuenos AiresArgentina
  3. 3.Universidad del CEMA (UCEMA) and CONICETBuenos AiresArgentina

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