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Electoral Opportunism And Water Pricing With Incomplete Transfer Of Control Rights

Author

Listed:
  • Francisco González-Gómez

    (Department of Applied Economics. University of Granada; and Water Research Institute, Spain)

  • Andrés J. Picazo-Tadeo

    (Department of Applied Economics II. University of Valencia; and Joint Research Group INTECO, Spain)

  • Marta Suárez-Varela

    (Department of Economic Structure and Development Economics. Autonomous University of Madrid, Spain)

Abstract

One of the forms of intervention in public services that lie beyond market forces is price control. While such regulation is justified by the need to achieve social goals, empirical evidence has shown that it is often used by politicians for electoral gain. This paper looks for evidence of opportunistic political behaviour in urban water pricing. Using data for 119 large Spanish cities covering the period 1998-2015, we find strong empirical evidence of the influence of the electoral cycle on water pricing insofar as price increases are significantly lower in the years preceding municipal elections than in non-pre-election years. Furthermore, outsourcing water service provision does not mitigate the relationship between the electoral cycle and water pricing. This result could be explained by incomplete transfer of control rights when the urban water service is outsourced, which allows politicians to use their right to supervise water tariffs to their advantage.

Suggested Citation

  • Francisco González-Gómez & Andrés J. Picazo-Tadeo & Marta Suárez-Varela, 2019. "Electoral Opportunism And Water Pricing With Incomplete Transfer Of Control Rights," Working Papers 1917, Department of Applied Economics II, Universidad de Valencia.
  • Handle: RePEc:eec:wpaper:1917
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    More about this item

    Keywords

    Electoral cycle; privatization; political opportunism; quantitative analysis; Spain; urban water pricing;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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