Product-Market Competition in the Water Industry: Voluntary Non-discriminatory Pricing

Reto Foellmi and Urs Meister ()

Journal of Industry, Competition and Trade, 2005, vol. 5, issue 2, 115-135

Abstract: Since franchise bidding in the piped water industry is problematic due to extensive investment requirements, product-market competition or common carriage is a valuable alternative for the introduction of competition. This paper analyses product-market competition by considering a simple model of interconnection where competition is introduced between vertically integrated neighbouring water suppliers. The model contains water markets specificities such as local and decentralised networks and related difficulties of regulating access charges. Even without any regulation, we show that: (i) an inefficient incumbent will give up its monopoly position and lower the access price far enough so that the low-cost competitor can enter his home market; (ii) efficiency of production will rise due to liberalisation; and (iii) in contrary to prejudicial claims, investment incentives are not destroyed by the introduction of competition for the market. Investments of low-cost firms may even increase. Copyright Springer Science + Business Media, Inc. 2005

Keywords: product-market competition; water industry; nondiscriminatory pricing (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10842-005-3722-0 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Product-Market Competition in the Water Industry: Voluntary Nondiscriminatory Pricing (2004)
Working Paper: Product-Market Competition in the Water Industry: Voluntarily Nondiscriminatory Pricing
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:kap:jincot:v:5:y:2005:i:2:p:115-135

Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/10842/PS2

DOI: 10.1007/s10842-005-3722-0

Access Statistics for this article

Journal of Industry, Competition and Trade is currently edited by Karl Aiginger, Marcel Canoy and Michael Peneder

More articles in Journal of Industry, Competition and Trade from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().