IDEAS home Printed from
   My bibliography  Save this article

Prescriptive Public Choice: Application To Residential Water Rate Reform




"Peltzman's model of price regulation predicts inefficient prices for regulated firms; based on a constraint giving the trade-off between economic profit and the regulated price, the price will be set between a competitive industry price and a monopoly price. This article generalizes the model for application to a wider class of trade-offs, including municipal utilities that are not legally permitted to make a profit. Extending Peltzman's idea of political support functions, this article defines political feasibility relative to economic efficiency. A Pareto superior change with compensation is sufficient but not necessary for political feasibility; the Kaldor-Hicks criterion is neither necessary nor sufficient for political feasibility. The generalization of Peltzman's model of public choice and the concept of political feasibility together explain why Tucson in 1976 and Los Angeles in 1993 adopted efficient water rates during droughts and why, 1 yr later, Tucson rescinded the rates and Los Angeles almost rescinded them. The concept of political feasibility explains why and how, after the drought, the Los Angeles innovations to rate design achieved efficiency and political feasibility, avoiding reversion to the previous, inefficient rates, by separating economic efficiency from political feasibility in both the rate design and the rate reform process." ("JEL" D42, D70, H00, L38, L51, L97, Q25, Q28, Q48, Q58) Copyright (c) 2009 Western Economic Association International.

Suggested Citation

  • Darwin C. Hall, 2009. "Prescriptive Public Choice: Application To Residential Water Rate Reform," Contemporary Economic Policy, Western Economic Association International, vol. 27(4), pages 555-565, October.
  • Handle: RePEc:bla:coecpo:v:27:y:2009:i:4:p:555-565

    Download full text from publisher

    File URL:
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
    2. Hall, Darwin C. & Thomas, Brian G., 1984. "A financial model for publicly-owned electric utilities," Energy, Elsevier, vol. 9(4), pages 333-340.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H00 - Public Economics - - General - - - General
    • L38 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Policy
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:coecpo:v:27:y:2009:i:4:p:555-565. 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: (Wiley Content Delivery) or (Christopher F. Baum). General contact details of provider: .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.