Advanced Search
MyIDEAS: Login to save this paper or follow this series

Product-Market Competition in the Water Industry: Voluntary Nondiscriminatory Pricing

Contents:

Author Info

  • Reto Foellmi
  • Urs Meister

    ()
    (Institute for Empirical Research in Economics, University of Zurich
    Institute for Strategy and Business Economics, University of Zurich)

Abstract

Since franchise bidding in the piped water industry is problematic due to extensive investment requirements, product-market competition or common carriage is a valuable alternative for the introduction of competition. This paper analyses product-market competition by considering a simple model of interconnection where competition is introduced between vertically integrated neighbouring water suppliers. The model contains water markets specificities such as local and decentralised networks and related difficulties of regulating access charges. Even without any regulation, we show that: (i) An inefficient incumbent will give up its monopoly position and lower the access price far enough so that the low-cost competitor can enter his home market. (ii) Efficiency of production will rise due to liberalisation. (iii) In contrary to prejudicial claims, investment incentives are not destroyed by the introduction of competition. Investments of low-cost firms may even increase.

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number 0032.

as in new window
Length:
Date of creation: 2004
Date of revision:
Publication status: Published in: Journal of Industry, Competition and Trade 5(2), 115-135, 2005
Handle: RePEc:iso:wpaper:0032

Contact details of provider:
Postal: Plattenstrasse 14, CH-8032 Zürich
Phone: ++41 1 634 29 27
Fax: ++41 1 634 43 48
Email:
Web page: http://www.isu.uzh.ch
More information through EDIRC

Related research

Keywords: Product-Market Competition; Water; Nondiscriminatory pricing;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Lars P. Feld & Bruno S. Frey, 2000. "Trust Breeds Trust: How Taxpayers are Treated," CESifo Working Paper Series 322, CESifo Group Munich.
  2. Ralf Becker & Urs Fischbacher & Thorsten Hens, . "Soft Landing of a Stock Market Bubble, An Experimental Study," IEW - Working Papers 090, Institute for Empirical Research in Economics - University of Zurich.
  3. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
  4. Igor V. Evstigneev & Klaus Rainer Schenk-Hoppé, . "From Rags to Riches: On Constant Proportions Investment Strategies," IEW - Working Papers 089, Institute for Empirical Research in Economics - University of Zurich.
  5. Bruno S. Frey & Stephan Meier, 2001. "Political Economists are Neither Selfish Nor Indoctrinated," CESifo Working Paper Series 490, CESifo Group Munich.
  6. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2001. "Appropriating the Commons - A Theoretical Explanation," CEPR Discussion Papers 2925, C.E.P.R. Discussion Papers.
  7. Ernst Fehr & Alexander Klein & Klaus M. Schmidt, . "Fairness, Incentives and Contractual Incompleteness," IEW - Working Papers 072, Institute for Empirical Research in Economics - University of Zurich.
  8. Klein, Michael, 1996. "Economic regulation of water companies," Policy Research Working Paper Series 1649, The World Bank.
  9. Renzetti, Steven, 1992. "Evaluating the welfare effects of reforming municipal water prices," Journal of Environmental Economics and Management, Elsevier, vol. 22(2), pages 147-163, March.
  10. Iris Bohnet & Bruno S. Frey & Steffen Huck, . "More Order with Less Law: On Contract Enforcement, Trust, and Crowding," IEW - Working Papers 052, Institute for Empirical Research in Economics - University of Zurich.
  11. Bruno Frey & Stephan Meier, 2005. "Selfish and Indoctrinated Economists?," European Journal of Law and Economics, Springer, Springer, vol. 19(2), pages 165-171, April.
  12. Simon Gächter & Armin Falk, . "Work motivation, institutions, and performance," IEW - Working Papers 062, Institute for Empirical Research in Economics - University of Zurich.
  13. Simon Gächter & Arno Riedl, . "Moral Property Rights in Bargaining," IEW - Working Papers 113, Institute for Empirical Research in Economics - University of Zurich.
  14. Rafael Lalive & Jan C. van Ours & Josef Zweimüller, . "The Effect of Benefit Sanctions on the Duration of Unemployment," IEW - Working Papers 110, Institute for Empirical Research in Economics - University of Zurich.
  15. Rabah Amir & Igor V. Evstigneev & Thorsten Hens & Klaus Reiner Schenk-Hoppé, 2002. "Market Selection and Survival of Investment Strategies," Discussion Papers 02-16, University of Copenhagen. Department of Economics.
  16. Newbery, D., 1996. "Privatisation and Liberalisation of Network Utilities," Cambridge Working Papers in Economics 9620, Faculty of Economics, University of Cambridge.
  17. Albrecht Ritschl & Ulrich Woitek, 2000. "Did Monetary Forces Cause the Great Depression? A Bayesian VAR Analysis for the U.S. Economy," Working Papers, Business School - Economics, University of Glasgow 2000_07, Business School - Economics, University of Glasgow.
  18. Paul A Grout, 2002. "Competition Law in Telecommunications and its Implications for Common Carriage of Water," The Centre for Market and Public Organisation 02/056, Department of Economics, University of Bristol, UK.
  19. Harstad, Ronald M & Crew, Michael A, 1999. "Franchise Bidding without Holdups: Utility Regulation with Efficient Pricing and Choice of Provider," Journal of Regulatory Economics, Springer, Springer, vol. 15(2), pages 141-63, March.
  20. Leonard J. Mirman & Klaus Reiner Schenk-HoppÈ, 2003. "Financial Markets and Stochastic Growth," Review of International Economics, Wiley Blackwell, vol. 11(2), pages 219-236, 05.
  21. Peter A.G. VanBergeijk & Jan Marc Berk, . "The Lucas Critique in Practice: An Empirical Investigation of the Impact of European Monetary Integration on the Term Structure," IEW - Working Papers 082, Institute for Empirical Research in Economics - University of Zurich.
  22. Laffont, Jean-Jacques & Tirole, Jean, 1996. "Creating Competition through Interconnection: Theory and Practice," Journal of Regulatory Economics, Springer, Springer, vol. 10(3), pages 227-56, November.
  23. Armin Falk & Ernst Fehr & Urs Fischbacher, . "Driving Forces of Informal Sanctions," IEW - Working Papers 059, Institute for Empirical Research in Economics - University of Zurich.
  24. Reiner Eichenberger & Bruno S. Frey, . "Europe's Eminent Economists: A Quantitative Analysis," IEW - Working Papers 057, Institute for Empirical Research in Economics - University of Zurich.
  25. Cowan, Simon, 1997. "Competition in the Water Industry," Oxford Review of Economic Policy, Oxford University Press, vol. 13(1), pages 83-92, Spring.
  26. Cowan, Simon, 1993. "Regulation of Several Market Failures: The Water Industry in England and Wales," Oxford Review of Economic Policy, Oxford University Press, vol. 9(4), pages 14-23, Winter.
  27. Bruno S. Frey & Reiner Eichenberger, 2000. "A Proposal for a Flexible Europe," The World Economy, Wiley Blackwell, vol. 23(10), pages 1323-1334, October.
  28. Reto Foellmi & Urs Meister, 2004. "Enhancing Efficiency of Water Supply – Product Market Competition versus Trade," Public Economics, EconWPA 0412012, EconWPA.
  29. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2008. "Testing theories of fairness--Intentions matter," Games and Economic Behavior, Elsevier, vol. 62(1), pages 287-303, January.
  30. Stefan Buehler, 1999. "A Further Look at Two-way Network Competition in Telecommunications," SOI - Working Papers 9904, Socioeconomic Institute - University of Zurich, revised Apr 2000.
  31. Bruno S. Frey & Stephan Meier, . "Two Concerns about Rational Choice: Indoctrination and Imperialism," IEW - Working Papers 104, Institute for Empirical Research in Economics - University of Zurich.
  32. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(448), pages 545-64, May.
  33. Bruno S. Frey & Stephan Meier, . "Pro-Social Behavior, Reciprocity or Both?," IEW - Working Papers 107, Institute for Empirical Research in Economics - University of Zurich.
  34. Zarnikau, Jay, 1994. "Spot market pricing of water resources and efficient means of rationing water during scarcity (water pricing)," Resource and Energy Economics, Elsevier, Elsevier, vol. 16(3), pages 189-210, August.
  35. Bruno S. Frey & Alois Stutzer, 2001. "Beyond Bentham – Measuring Procedural Utility," CESifo Working Paper Series 492, CESifo Group Munich.
  36. Michael Webb & David Ehrhardt, 1998. "Improving Water Services Through Competition," World Bank Other Operational Studies 11511, The World Bank.
  37. Mark Armstrong & Simon Cowan & John Vickers, 1994. "Regulatory Reform: Economic Analysis and British Experience," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510790, December.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Föllmi, Reto & Meister, Urs, 2011. "Enhancing the Efficiency of Water Supply: Product Market Competition versus Trade," Economics Working Paper Series 1121, University of St. Gallen, School of Economics and Political Science.
  2. Vinnari, Eija M., 2006. "The economic regulation of publicly owned water utilities: The case of Finland," Utilities Policy, Elsevier, Elsevier, vol. 14(3), pages 158-165, September.
  3. Reto Foellmi & Urs Meister, 2004. "Enhancing Efficiency of Water Supply - Product Market Compoetition versus Trade," Working Papers 0025, University of Zurich, Institute for Strategy and Business Economics (ISU).
  4. Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2007. "Economies of Scale and Scope in the Swiss Multi-Utilities Sector," CEPE Working paper series, CEPE Center for Energy Policy and Economics, ETH Zurich 07-59, CEPE Center for Energy Policy and Economics, ETH Zurich.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iso:wpaper:0032. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IBW IT).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.