Equity, Efficiency and Financial Viability: Public‐Utility Pricing with Special Reference to Water Supply

Yew-Kwang Ng (kwang.ng@monash.edu)

Australian Economic Review, 1987, vol. 20, issue 3, 21-35

Abstract: The pricing and investment policies of a public enterprise should be designed to achieve efficiency since equity is better pursued by general policy regarding income distribution. Short‐run marginal‐cost pricing does not generally lead to long‐term deficit, but may involve price and surplus/deficit cycles for the case with lumpy investments and growing demand, where the price increases with demand but is reduced with capacity expansion. Taking account of the extra costs of government revenue collection and the likely average price/cost ratio in the economy, the third‐best pricing policy is likely to result in long‐term surplus, making the objectives of equity, efficiency and financial viability much more consistent with each other than is generally believed. This is particularly true for water with historically increasing costs of additional sources of supply.

Date: 1987
References: View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://doi.org/10.1111/j.1467-8462.1987.tb00669.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecr:v:20:y:1987:i:3:p:21-35

Ordering information: This journal article can be ordered from
https://ordering.onl ... 7-8462&ref=1467-8462

Access Statistics for this article

Australian Economic Review is currently edited by John de New, Viet Hoang Nguyen and Susan Méndez

More articles in Australian Economic Review from The University of Melbourne, Melbourne Institute of Applied Economic and Social Research Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery (contentdelivery@wiley.com).