Do welfare maximising water utilities maximise welfare under common carriage?
AbstractDue to the increasing discussion about liberalisation in the piped water industry municipal authorities in several European countries consider modifications of their water utilities’ structure such as legal constitution, business objectives or private participation. The purpose of this paper is to evaluate the extent to which it is socially optimal to compose water utilities as welfare or profit maximising companies when assuming the introduction of competition in the market based on common carriage – as applied in England and Wales. Using a game theoretic model of mixed oligopolies that contains water markets specificities we show that welfare tends to be higher in a regime, where utilities are instructed to maximise profits rather than welfare.
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Bibliographic InfoPaper provided by EconWPA in its series Others with number 0505001.
Length: 38 pages
Date of creation: 03 May 2005
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Water; Networks; Corporate Governance; Mixed Oligopoly;
Find related papers by JEL classification:
- L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-05-07 (All new papers)
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