Enhancing Efficiency of Water Supply – Product Market Competition versus Trade

Reto Foellmi () and Dr. Urs Meister

Public Economics from EconWPA

Abstract: This paper analyses and compares potential efficiency gains induced by the introduction of product market competition and cross boarder trade in the piped water market. We argue that due to the specific circumstances in the water sector product market competition, i.e. competition by common carriage is not expected to be very intensive. The connection of networks could alternatively be used for cross boarder trade between neighboured water utilities. We show that competition by common carriage leads to production incentives for the inefficient supplier. This implies that the retail prices tend to be lower than with cross border trade. However, the efficiency effect dominates and resulting welfare is higher in case of trade.

Keywords: Water; Networks; Product-Market Competition; Trade; Bargaining (search for similar items in EconPapers)
JEL-codes: L95 L43 D21 Q25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-env and nep-res
Date: 2004-12-21
Note: Type of Document - pdf; pages: 39
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http://129.3.20.41/eps/pe/papers/0412/0412012.pdf (application/pdf)

Related works:
Working Paper: Enhancing Efficiency of Water Supply - Product Market Compoetition versus Trade (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwppe:0412012

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