EconPapers    
Economics at your fingertips  
 

Price cap regulation and water quality

Thomas Bue Bjørner (), Jacob Victor Hansen () and Astrid Fanger Jakobsen ()
Additional contact information
Thomas Bue Bjørner: Danish Competition and Consumer Authority
Jacob Victor Hansen: Danish Competition and Consumer Authority
Astrid Fanger Jakobsen: Danish Competition and Consumer Authority

Journal of Regulatory Economics, 2021, vol. 60, issue 2, No 1, 95-116

Abstract: Abstract A number of studies suggest that price cap regulation may reduce the quality of the regulated good. This paper analyzes the impact on drinking water quality of a shift from cost-of-service to price cap regulation in Denmark, using a balanced panel of drinking water companies, for the period 2008 to 2016. The price cap was introduced in 2011 for companies above a certain threshold size. We exploit this quasi-experimental setting to estimate the impact of the shift in regulation using a regression discontinuity difference-in-differences approach. Our measure of drinking water quality is based on results from a compulsory surveillance drinking water testing program, which investigates whether or not water samples contain a level of microbiological content that exceeds limit values. More specifically, we compare the change over time in water quality for a treatment group of 113 companies regulated with price caps that have a size close to the threshold size for being regulated, with the change in drinking water quality for a control group of 282 companies that are below but close to the threshold size. We find that the shift in regulation has not caused a reduction in drinking water quality in Denmark.

Keywords: Price cap; Drinking water quality; Quasi-experiment; Regression discontinuity; Multi-period difference-in-differences (search for similar items in EconPapers)
JEL-codes: C21 L15 L51 L95 Q25 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s11149-021-09439-y Abstract (text/html)
Access to full text is restricted to subscribers.

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:kap:regeco:v:60:y:2021:i:2:d:10.1007_s11149-021-09439-y

Ordering information: This journal article can be ordered from
http://www.springer. ... on/journal/11149/PS2

DOI: 10.1007/s11149-021-09439-y

Access Statistics for this article

Journal of Regulatory Economics is currently edited by Menaham Spiegel

More articles in Journal of Regulatory Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2022-05-12
Handle: RePEc:kap:regeco:v:60:y:2021:i:2:d:10.1007_s11149-021-09439-y