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Explaining Geographical Differences in Water Prices: Do Institutional Factors Really Matter?


  • Bae, Suho

    (San Francisco State U)


The availability, price, and quality of infrastructure services vary considerably across regions. This paper analyzes which elements significantly contribute to geographical differences in water prices. For empirical analysis, it employs water supply price and demand equations under a system of simultaneous structural equations. Several institutional factors explain geographical differences in water prices, such as prior appropriation water rights versus riparian rights, pricing structures, combining water bills with other bills, and other infrastructure. Water rate regulations by public utility commission also have some negative effects on water prices. State environmental regulations and commitments contribute to higher water prices, especially for non-residential water users.

Suggested Citation

  • Bae, Suho, 2007. "Explaining Geographical Differences in Water Prices: Do Institutional Factors Really Matter?," The Review of Regional Studies, Southern Regional Science Association, vol. 37(2), pages 207-250.
  • Handle: RePEc:rre:publsh:v:37:y:2007:i:2:p:207-50

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    References listed on IDEAS

    1. W. D. Shaw, 2005. "Water Resource Economics and Policy," Books, Edward Elgar Publishing, number 3495.
    2. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
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    7. Halvorsen, Robert, 1975. "Residential Demand for Electric Energy," The Review of Economics and Statistics, MIT Press, vol. 57(1), pages 12-18, February.
    8. Renzetti, S., 1998. "An Empirical Perspective on Water Pricing Reforms," Working Papers 1998-02, Brock University, Department of Economics.
    9. M. I. Ansari & D. V. Gordon & C. Akuamoah, 1997. "Keynes versus Wagner: public expenditure and national income for three African countries," Applied Economics, Taylor & Francis Journals, vol. 29(4), pages 543-550.
    10. David S Saal & David Parker, 2000. "The impact of privatization and regulation on the water and sewerage industry in England and Wales: a translog cost function model," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(6), pages 253-268.
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    Cited by:

    1. Suho Bae & Sheldon Gen & Seong-Gin Moon, 2012. "Institutional, geographic, and facility factors affecting differences in prices for wastewater services," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(3), pages 767-788, December.

    More about this item


    Regulation; Water;

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water


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