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Public Utility Ownership in 19th-Century America: The "Aberrant" Case of Water

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  • Scott E. Masten

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Unlike other public utilities, most water in the United States is supplied by publicly owned and operated waterworks. The predominance of the public sector in the supply of water was not always the case, however; private firms dominated US water supply throughout most of the 19th century. This article analyzes the puzzle of why water and sanitation systems were the only major utilities to become predominantly public by, first, reexamining historical accounts of the problems of contracting for water services in light of modern theories of economic organization and, then, evaluating hypotheses derived from those accounts using data on 373 waterworks serving US municipalities with populations over 10,000 in 1890. Among other results, municipal ownership is found to be related to the distribution of population and commerce within a city in ways that suggest that frictions between cities and private companies over system extensions and improvements played a significant role in the shift to municipal ownership. The Author 2010. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

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  • Scott E. Masten, 2011. "Public Utility Ownership in 19th-Century America: The "Aberrant" Case of Water," Journal of Law, Economics, and Organization, Oxford University Press, vol. 27(3), pages 604-654.
  • Handle: RePEc:oup:jleorg:v:27:y::i:3:p:604-654
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    File URL: http://hdl.handle.net/10.1093/jleo/ewp041
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    1. Spiller, Pablo T., 2013. "Transaction cost regulation," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 232-242.
    2. Beecher, Janice A. & Kalmbach, Jason A., 2013. "Structure, regulation, and pricing of water in the United States: A study of the Great Lakes region," Utilities Policy, Elsevier, vol. 24(C), pages 32-47.
    3. Felix Höffler & Achim Wambach, 2013. "Investment coordination in network industries: the case of electricity grid and electricity generation," Journal of Regulatory Economics, Springer, vol. 44(3), pages 287-307, December.
    4. Franck, Raphaël & Johnson, Noel D. & Nye, John V.C., 2014. "From internal taxes to national regulation: Evidence from a French wine tax reform at the turn of the twentieth century," Explorations in Economic History, Elsevier, vol. 51(C), pages 77-93.
    5. Höffler, Felix & Wambach, Achim, 2013. "Investment Coordination in Network Industries: The Case of Electricity Grid and Electricity," EWI Working Papers 2013-12, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    6. Sonia R. Bhalotra & Alberto Diaz-Cayeros & Grant Miller & Alfonso Miranda & Atheendar S. Venkataramani, 2017. "Urban Water Disinfection and Mortality Decline in Developing Countries," NBER Working Papers 23239, National Bureau of Economic Research, Inc.
    7. David M. Cutler & Grant Miller, 2006. "Water, Water Everywhere. Municipal Finance and Water Supply in American Cities," NBER Chapters,in: Corruption and Reform: Lessons from America's Economic History, pages 153-184 National Bureau of Economic Research, Inc.
    8. Scott E. Masten, 2013. "The enterprise as community: firms, towns and universities," Chapters,in: Handbook of Economic Organization, chapter 6 Edward Elgar Publishing.
    9. Ronald C. Griffin, 2012. "The Origins and Ideals of Water Resource Economics in the United States," Annual Review of Resource Economics, Annual Reviews, vol. 4(1), pages 353-377, August.

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