Discriminatory pricing and monopolies in water public services: An analysis of consumers’ reaction to the price-signal distortions
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2019
- ISIDORE Id: 10670/1.e852e0...
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Alexandre Mayol et al., « Discriminatory pricing and monopolies in water public services: An analysis of consumers’ reaction to the price-signal distortions », Revue économique, ID : 10670/1.e852e0...
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Since 2010, the way water tariffs are set in France has changed since local governments can now use increasing-block tariffs. These tariffs, even if they have been thought as second-best optima to monopolies’ deadweight losses, are complex to implement to satisfy some other goals. The sub-optimal reactions of consumers to the price signal and the issues of redistribution question the efficacy of the mechanism. This piece of research theoretically analyses the increasing-block tariffs properties. It then empirically tests the reaction of consumers to the price signal from a natural experiment taking place in Dunkerque. Results show that users whose consumption is at the lower or the upper bound react strongly to the marginal price, while it questions the equity of this mechanism which is highly distortive.
