This discussion paper attempts the investigation of inefficiency with respect to water suppliers in rural areas of East and West Germany. This is done by using a nonradial measure of input-specific allocative inefficiency based on the demand system derived from a flexible cost function for the...

The aim of this paper is to check whether intergovernmental transfers for water projects accepted in 1986 can be rationalized by a simple efficiency criterion. The empirical findings support this conjecture only partially.