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Routing Utility Transit Infrastructure: A Social Welfare Theory Approach

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  • Oleg O. Smirnov, Sergey B. Sivaev

Abstract

The construction of real estate for a wide range of purposes necessitates the creation of new infrastructure. This paper shows that the existing methodology for paying for connection to water supply and sanitation systems contains a significant drawback in the form of the creation of many overlapping networks instead of the construction of one common transit network. This approach leads to welfare losses for both society and developers. The purpose of the study is to substantiate the ineffectiveness of the network routing approach, which is used in the methodology of payment for connection to water supply and sewerage systems from the standpoint of the theory of social welfare. The scientific hypothesis is that the creation of a large-diameter transit network in the future turns out to be less expensive than many separate sections of distribution networks of smaller diameter. In order to prove this point, the cost of construction and maintenance of networks is estimated in these two approaches, for which 118 tariff decisions for 85 regional capitals were analyzed. The data for the assessment is taken as the average of connection tariffs per unit length of a network of the corresponding diameter for 2022. Additionally, the potential for increasing the efficiency of land use in each of the two approaches was assessed. According to the results of the study, it was demonstrated that a fee from the developer, which involves the creation of common transit networks, is more preferable for all participants in the connection. This means that the sum total of costs within the local optimum will be higher than in the case of one global optimum for the territory as a whole, that is, the second case can be called the most subordinate to public interests. The theoretical significance of the work carried out lies in the graphic justification of the need to apply fees from developers when developing infrastructure. The practical significance of the work lies in the substantiation of the construction of a morphologically correct structure of the network economy.

Suggested Citation

  • Oleg O. Smirnov, Sergey B. Sivaev, 2024. "Routing Utility Transit Infrastructure: A Social Welfare Theory Approach," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 23(2), pages 341-363.
    • Handle: RePEc:aiy:jnjaer:v:23:y:2024:i:2:p:341-363
    DOI: https://doi.org/10.15826/vestnik.2024.23.2.014
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    tariff regulation; engineering infrastructure; utility connection; public welfare; water supply; sanitation.;
    All these keywords.

    JEL classification:

    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
    • L99 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Other

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