TECHNICAL EFFICIENCY OF RURAL WATER UTILITIES

Technical efficiency of rural water utilities is determined using fron tier production functions. An indirect production function is develope d to model the two-step production process of a local government-contr olled firm. Data from 26 rural Nevada water utilities are used to esti mate inefficiency in terms of firm-specific variables. A multistep est imation procedure is used instead of single-step maximum likelihood es timation. Model selection tests are used to choose the best model. Pri vately owned utilities are most efficient; self-governing water distri cts are the least efficient. Municipal governments operate the most an d least efficient utilities.