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The welfare costs of non-marginal water pricing: evidence from the water only companies in England and Wales

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  • Simon Porcher

    (IAE - Institut d'Administration des Entreprises)

  • Alexandros Maziotis
  • Maria Molinos-Senante

Abstract

The evaluation of the economic efficiency of regulatory schemes is essential for regulators and utilities. In this study it is analysed for the first time the welfare costs of non-marginal cost pricing in the water supply in England and Wales, by computing the deadweight loss of the water only companies (WoCs) that existed over the period of 1993–2009. The results indicate that the current price schemes can have substantial efficiency costs. Our estimates show that the loss of efficiency for the WoCs lies between 15 and 60 million GBP over the period 1993–2009. These amounts could have been redistributed either to the companies in terms of profits or to the consumers via price reductions. The methodology and results of this study are of great interest for both regulators and water utilities managers to evaluate the effectiveness of price regulation and make informed decisions.
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  • Simon Porcher & Alexandros Maziotis & Maria Molinos-Senante, 2017. "The welfare costs of non-marginal water pricing: evidence from the water only companies in England and Wales," Post-Print hal-02145826, HAL.
    • Handle: RePEc:hal:journl:hal-02145826
    DOI: 10.1080/1573062X.2017.1325494
    Note: View the original document on HAL open archive server: https://hal.science/hal-02145826
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    Cited by:

    1. Porcher, Simon, 2017. "The ‘hidden costs’ of water provision: New evidence from the relationship between contracting-out and price in French water public services," Utilities Policy, Elsevier, vol. 48(C), pages 166-175.
    2. María Molinos-Senante & Alexandros Maziotis, 2019. "Cost Efficiency of English and Welsh Water Companies: a Meta-Stochastic Frontier Analysis," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 33(9), pages 3041-3055, July.
    3. Maria Molinos-Senante & Alexandros Maziotis, 2022. "Decomposition of Cost Efficiency Into Persistent and Transient Efficiency in the Provision of Water Services: Evidence from England and Wales," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 36(6), pages 1849-1862, April.
    4. Molinos-Senante, María & Maziotis, Alexandros & Sala-Garrido, Ramón, 2020. "Changes in the total costs of the English and Welsh water and sewerage industry: The decomposed effect of price and quantity inputs on efficiency," Utilities Policy, Elsevier, vol. 66(C).

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    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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