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Do welfare maximising water utilities maximise welfare under common carriage?

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  • Urs Meister

    (University of Zurich)

Abstract

Due to the increasing discussion about liberalisation in the piped water industry municipal authorities in several European countries consider modifications of their water utilities’ structure such as legal constitution, business objectives or private participation. The purpose of this paper is to evaluate the extent to which it is socially optimal to compose water utilities as welfare or profit maximising companies when assuming the introduction of competition in the market based on common carriage – as applied in England and Wales. Using a game theoretic model of mixed oligopolies that contains water markets specificities we show that welfare tends to be higher in a regime, where utilities are instructed to maximise profits rather than welfare.

Suggested Citation

  • Urs Meister, 2005. "Do welfare maximising water utilities maximise welfare under common carriage?," Others 0505001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpot:0505001
    Note: Type of Document - pdf; pages: 38
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/othr/papers/0505/0505001.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Reto Foellmi & Urs Meister, 2012. "Enhancing the Efficiency of Water Supply—Product Market Competition Versus Trade," Journal of Industry, Competition and Trade, Springer, vol. 12(3), pages 299-324, September.

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    More about this item

    Keywords

    Water; Networks; Corporate Governance; Mixed Oligopoly;
    All these keywords.

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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