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Does Intermunicipal Cooperation Affect Prices? An Economic Analysis of the French Drinking Water Sector

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  • Mehdi Guelmamen

Abstract

The provision of drinking water has become a central concern for public authorities due to climate change, prompting policymakers to reevaluate their approach to this semi-renewable resource. In this paper, we assess the effect of inter-municipal cooperation on performance. Using a comprehensive panel dataset comprising all French drinking water providers from 2008 to 2021, we show that organizational forms chosen by municipalities have an effect on prices of drinking water paid by consumers. More precisely, our empirical findings reveal a selection bias in the estimation of price equations and we show that consumer prices are significantly higher on average when municipalities decide to cooperate. Inter-municipal cooperation does not necessarily lead to better performance in the provision of drinking water.

Suggested Citation

  • Mehdi Guelmamen, 2024. "Does Intermunicipal Cooperation Affect Prices? An Economic Analysis of the French Drinking Water Sector," Working Papers of BETA 2024-40, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2024-40
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    File URL: http://beta.u-strasbg.fr/WP/2024/2024-40.pdf
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    More about this item

    Keywords

    Intermunicipal cooperation; local government; public services; drinking water prices; selection bias.;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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