By Urs Meister (auth.)
Water shortage isn't really completely a priority of the terrible. built nations are more and more dealing with difficulties with regards to better in step with capita intake and pollutants in order that bettering the potency of the water provide ranks one of the major international demanding situations of the longer term. the mandatory advancements usually are not just a topic of technical growth but additionally of institutional design.
utilizing instruments of recent commercial economics, Urs Meister examines the results of privatisation and pageant within the piped water undefined. contemplating the 2 major ways for festival in an with usual monopoly personality, universal carriage (interconnection) and franchise bidding (auctions), he analyses expenditures, retail costs and funding. Such research exhibits that festival could be a worthy chance to enhance the potency of water offer.
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Additional info for Introducing Competition into the Piped Water Market: A Theoretical Analysis of Common Carriage and Franchise Bidding
Without any ex ante regulation A can charge a sufficient high access price in order to prevent the more efficient 5's access and to defend its monopoly position. Nevertheless, in chapter 2 we show that under certain circumstances, voluntary access can occur even in an unregulated regime. Such voluntary access requires differentials in marginal treatment costs. A less efficient utility A with higher marginal treatment costs than its competitor B has incentives to allow third party access and therefore to admit competition.
Using a game theoretic model of mixed oligopolies that contains water markets specificities, this chapter reveals the surprising result that welfare tends to be higher in a regime, where the utilities are instructed to maximise profits rather than welfare. There is a broad literature about mixed oligopolies, which describes the effects of different governance structures in oligopoly competition. Early literature assumes competition between a public welfare maximising company and private profit maximising companies, where the public company acts as a Stackelberg leader - see Bos (1986), Rees (1984) or Hagen (1979).
See also Meister (2005). 38 DO WELFARE MAXIMISING WATER UTILITIES MAXIMISE WELFARE UNDER COMMON CARRIAGE? 1 Considering Water Market Specificities When designing a competition model based on common carriage, one has to consider several technical aspects concerning the piped water industry. ^^ Secondly, water networks are assumed to be one-way networks, since water suppliers do not receive any direct and network based feedback from their customers (see Economides 2000, p. 4). Thirdly, the geographical extension of water networks is expected to be regional or even local due to transport costs arising from pumping requirements and water quality losses that increase with the transport distance (see BMWi 2001, p.
Introducing Competition into the Piped Water Market: A Theoretical Analysis of Common Carriage and Franchise Bidding by Urs Meister (auth.)