Measuring the dynamic efficiency costs of regulators' preferences: Municipal water utilities in the Arid West

Journal Article (Journal Article)

Evidence suggests that municipal water utility administrators in the western US price water significantly below its marginal cost and, in so doing, inefficiently exploit aquifer stocks and induce social surplus losses. This paper empirically identifies the objective function of those managers, measures the deadweight losses resulting from their price-discounting decisions, and recovers the efficient water pricing policy function from counterfactual experiments. In doing so, the estimation uses a "continuous-but-constrained-control" version of a nested fixed-point algorithm in order to measure the important intertemporal consequences of groundwater pricing decisions.

Full Text

Duke Authors

Cited Authors

  • Timmins, C

Published Date

  • January 1, 2002

Published In

Volume / Issue

  • 70 / 2

Start / End Page

  • 603 - 629

International Standard Serial Number (ISSN)

  • 0012-9682

Digital Object Identifier (DOI)

  • 10.1111/1468-0262.00297

Citation Source

  • Scopus