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The Welfare Economics of Optional Water Metering

A model of decentralised metering decisions that applies to the water industry is developed. The social benefit of metering is higher the more sensitive demand is to the price. Allowing households to choose whether or not to have meters is efficient when only small households should have meters but does not work when the regulator does not know household characteristics and only larger households should have meters. The policy of requiring meters to be provided free, which has been adopted in England and Wales, is analysed. Copyright � The Author(s). Journal compilation � Royal Economic Society 2009.

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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 120 (2010)
Issue (Month): 545 (06)
Pages: 800-815

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Handle: RePEc:ecj:econjl:v:120:y:2010:i:545:p:800-815
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