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ELECTORAL OPPORTUNISM AND WATER PRICING WITH INCOMPLETE TRANSFER OF CONTROL RIGHTS

Francisco González-Gómez (), Andres Picazo-Tadeo () and Marta Suárez-Varela
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Marta Suárez-Varela: Department of Economic Structure and Development Economics. Autonomous University of Madrid, Spain

No 1917, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: One of the forms of intervention in public services that lie beyond market forces is price control. While such regulation is justified by the need to achieve social goals, empirical evidence has shown that it is often used by politicians for electoral gain. This paper looks for evidence of opportunistic political behaviour in urban water pricing. Using data for 119 large Spanish cities covering the period 1998-2015, we find strong empirical evidence of the influence of the electoral cycle on water pricing insofar as price increases are significantly lower in the years preceding municipal elections than in non-pre-election years. Furthermore, outsourcing water service provision does not mitigate the relationship between the electoral cycle and water pricing. This result could be explained by incomplete transfer of control rights when the urban water service is outsourced, which allows politicians to use their right to supervise water tariffs to their advantage.

Keywords: Electoral cycle; privatization; political opportunism; quantitative analysis; Spain; urban water pricing (search for similar items in EconPapers)
JEL-codes: C23 D72 L33 L95 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-eur and nep-pol
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http://repecsrv.uv.es/paper/RePEc/pdf/eec_1917.pdf First version, 2019 (application/pdf)

Related works:
Journal Article: Electoral opportunism and water pricing with incomplete transfer of control rights (2020) Downloads
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