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VOLUME II
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AUTUMN 1994
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FIXING OPTIMUM PRICES FOR URBAN WATER SUPPLY
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LOURDES TRUJILLO
Universidad de Las Palmas de Gran Canaria |
This paper addresses some aspects of water pricing policy in a water industry. The purpose is to calculate the social benefit diference between proposing a two-parts tariff and increasing block tariff. The former is based on economic efficiency and the latter is the one actually applied in the water utility analized. The marginal cost its estimated in order to make up the two parts tariff proposed. The finding shows significant increase of social welfare for both lineal demand functions and constant elasticity functions.
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Keywords: watter supply, marginal cost, social welfare, economic efficiency.
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