The Relationships between Cost and User Charges: The Case of the Norwegian Utility Service
AbstractGovernments struggle with rising service spending, and user charges represent a possible incentive mechanism to control costs. This paper investigates the relationships between costs and user charges in the sewage industry in Norwegian local governments. The analysis addresses the following questions: (i) To what extent are increased costs passed on to consumers in higher user charges? (ii) Does user-charge financing lead to higher or lower unit cost? The econometric analysis indicates that 30-40% of a cost increase is passed on to consumers in higher user charges. Moreover, user-charge financing has a significant negative effect on the unit cost. An increase in user-charge financing by 10 percentage points is predicted to reduce the unit cost by up to 10%.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal FinanzArchiv.
Volume (Year): 61 (2005)
Issue (Month): 1 (March)
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Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
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- Borge, Lars-Erik & Rattsø, Jørn, 2008.
"Property taxation as incentive for cost control: Empirical evidence for utility services in Norway,"
European Economic Review,
Elsevier, vol. 52(6), pages 1035-1054, August.
- Lars-Erik Borge & Jørn Rattsø, 2006. "Property taxation as incentive for cost control:Empirical evidence for utility services in Norway," Working Paper Series 7606, Department of Economics, Norwegian University of Science and Technology.
- Lars-Erik Borge & Jørn Rattsø, 2003. "Property taxation as incentive for cost control: Empirical evidence for utility services in Norway," ERSA conference papers ersa03p219, European Regional Science Association.
- Jørn Rattsø & Jon Hernes Fiva, 2005. "Decentralization with Property Taxation to Improve Incentives: Evidence from Local Governments’ Discrete Choice," Working Paper Series 5305, Department of Economics, Norwegian University of Science and Technology, revised 02 Sep 2005.
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