Regulation of Public Utilities under Asymmetric Information
AbstractWe consider the relationship between a localcommunity and a private operator in charge ofthe water utility. An important feature of themodel is the possibility of water networklosses that are costly to the operator. Wecompute the first-best and asymmetricinformation solutions to the optimal contract,with private information on the operator'stechnology. Based on an econometric estimationof production cost and water demand for a panelof French local communities, we simulate theoptimal contract solutions and show thatasymmetric information has importantconsequences for the regulation of water publicutilities. Copyright Kluwer Academic Publishers 2003
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Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.
Volume (Year): 26 (2003)
Issue (Month): 1 (September)
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Web page: http://www.springerlink.com/link.asp?id=100263
contract; environment; information; regulation; water;
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