IDEAS home Printed from https://ideas.repec.org/a/ecm/emetrp/v70y2002i2p603-629.html
   My bibliography  Save this article

Measuring the Dynamic Efficiency Costs of Regulators' Preferences: Municipal Water Utilities in the Arid West

Author

Listed:
  • Christopher Timmins

    () (Department of Economics, Yale University, P. O. Box 208264, New Haven, CT 06520-8264, U.S.A.)

Abstract

Evidence suggests that municipal water utility administrators in the western US price water significantly below its marginal cost and, in so doing, inefficiently exploit aquifer stocks and induce social surplus losses. This paper empirically identifies the objective function of those managers, measures the deadweight losses resulting from their price-discounting decisions, and recovers the efficient water pricing policy function from counterfactual experiments. In doing so, the estimation uses a "continuous-but-constrained- control" version of a nested fixed-point algorithm in order to measure the important intertemporal consequences of groundwater pricing decisions. Copyright The Econometric Society 2002.

Suggested Citation

  • Christopher Timmins, 2002. "Measuring the Dynamic Efficiency Costs of Regulators' Preferences: Municipal Water Utilities in the Arid West," Econometrica, Econometric Society, vol. 70(2), pages 603-629, March.
  • Handle: RePEc:ecm:emetrp:v:70:y:2002:i:2:p:603-629
    as

    Download full text from publisher

    File URL: http://www.blackwellpublishing.com/ecta/asp/abstract.asp?iid=2&aid=297&vid=70
    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

    as
    1. Peltzman, Sam, 1971. "Pricing in Public and Private Enterprises: Electric Utilities in the United States," Journal of Law and Economics, University of Chicago Press, vol. 14(1), pages 109-147, April.
    2. Feigenbaum, Susan & Teeples, Ronald, 1983. "Public versus Private Water Delivery: A Hedonic Cost Approach," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 672-678, November.
    3. Christopher Timmins, 2003. "Demand-Side Technology Standards Under Inefficient Pricing Regimes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 107-124, September.
    4. R. Bruce Billings, 1982. "Specification of Block Rate Price Variables in Demand Models," Land Economics, University of Wisconsin Press, vol. 58(3), pages 386-394.
    5. Baron, David P & Myerson, Roger B, 1982. "Regulating a Monopolist with Unknown Costs," Econometrica, Econometric Society, vol. 50(4), pages 911-930, July.
    6. John L. Mikesell & Patrick C. Mann, 1976. "Pricing by Rural Electric Cooperatives," Land Economics, University of Wisconsin Press, vol. 52(1), pages 96-102.
    7. Rust, J., 1991. "Estimation of dynamic Structural Models: Problems and Prospects Part I : Discrete Decision Processes," Working papers 9106, Wisconsin Madison - Social Systems.
    8. 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.
    9. Swallow, Stephen K. & Marin, Carlos M., 1988. "Long run price inflexibility and efficiency loss for municipal water supply," Journal of Environmental Economics and Management, Elsevier, vol. 15(2), pages 233-247, June.
    10. Oscar R. Burt, 1964. "Optimal Resource Use Over Time with an Application to Ground Water," Management Science, INFORMS, vol. 11(1), pages 80-93, September.
    11. Knapp Keith C. & Olson Lars J., 1995. "The Economics of Conjunctive Groundwater Management with Stochastic Surface Supplies," Journal of Environmental Economics and Management, Elsevier, vol. 28(3), pages 340-356, May.
    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


    Cited by:

    1. Lourens Broersma & Arjen Edzes & Jouke van Dijk, 2011. "Have Dutch Municipalities Become More Efficient in Managing the Costs of Social Assistance Dependency? (refereed paper)," ERSA conference papers ersa10p177, European Regional Science Association.
    2. Arpke, Angela & Strong, Kelly, 2006. "A comparison of life cycle cost analyses for a typical college dormitory using subsidized versus full-cost pricing of water," Ecological Economics, Elsevier, vol. 58(1), pages 66-78, June.
    3. Wallsten, Scott & Kosec, Katrina, 2008. "The effects of ownership and benchmark competition: An empirical analysis of U.S. water systems," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 186-205, January.
    4. Baisa, Brian & Davis, Lucas W. & Salant, Stephen W. & Wilcox, William, 2010. "The welfare costs of unreliable water service," Journal of Development Economics, Elsevier, vol. 92(1), pages 1-12, May.
    5. Cook, Jonathan A. & Lin, C.-Y. Cynthia, 2015. "Wind Turbine Shutdowns and Upgrades in Denmark: Timing Decisions and the Impact of Government Policy," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 204960, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    6. Bauman, Allison & Goemans, Christopher & Pritchett, James & Thilmany McFadden, Dawn, 2015. "Modeling Imperfectly Competitive Water Markets in the Western U.S," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 201448, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    7. Kahn, Matthew E. & Walsh, Randall, 2015. "Cities and the Environment," Handbook of Regional and Urban Economics, Elsevier.
    8. Pérez Montes, Carlos, 2013. "Regulatory bias in the price structure of local telephone service," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 462-476.
    9. Worthington, Andrew C., 2010. "Commercial and Industrial Water Demand Estimation: Theoretical and Methodological Guidelines for Applied Economics Research/Estimación de la demanda de agua comercial e industrial: pautas teóricas y m," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 28, pages 237-258, Agosto.
    10. Lehmann, Paul, 2011. "Making water affordable to all: A typology and evaluation of options for urban water pricing," UFZ Discussion Papers 10/2011, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    11. Wichman, Casey J., 2017. "Information provision and consumer behavior: A natural experiment in billing frequency," Journal of Public Economics, Elsevier, vol. 152(C), pages 13-33.
    12. María Angeles García Valiñas, 2005. "Promotion and remuneration of university professors: from the LRU to the COU," Hacienda Pública Española, IEF, vol. 172(1), pages 119-143, June.
    13. Amy Finkelstein, 2007. "E-ZTax: Tax Salience and Tax Rates," NBER Working Papers 12924, National Bureau of Economic Research, Inc.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    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:ecm:emetrp:v:70:y:2002:i:2:p:603-629. 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-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/essssea.html .

    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.