We were engaged by UKWIR, the research organisation of the UK water industry, to develop econometric models for the purposes of comparative efficiency analysis of regulated England and Wales water companies' operating expenditure.
The regulator Ofwat uses cross-sectional econometric models for comparative efficiency analysis. This project developed models that used time series panel data: data across companies over up to nine years. The models took account of "catch-up" theories about the dynamics of companies' expenditure.
The project included the development of a user-friendly modelling tool to enable the industry and Ofwat to run and modify the set of econometric models that we have developed.