water pricing policies public decision making and farmers response implications for water policy abstract the problems caused by water scarcity demand important changes in the criteria and objectives of water policies the agricultural sector in spain consumes up to 80 of all available hydric resources and the need to increase the efficiency of current uses of water in the agricultural sector is at the core of the country s national water policy one alternative would be to resort to water pricing policies with the aim of providing incentives to save water consumption although it would inflict a certain degree of income losses to the farmers and raise the revenue collected by the water authorities the objective of this research is to analyze the effect caused by the application of different water pricing policies on water demand farmers income and the revenue collected by the government agency to undertake this analysis a dynamic mathematical programming model has been built that simulates farmers behavior and their response to different water pricing scenarios empirical application of the model has been carried out in several irrigation districts in spain covering varied farm regions and river basins results show that the effects of alternative pricing policies for irrigation water are strongly dependent on regional structural and institutional conditions and that changing policies produce distinct consequences within the same region and water district thus equivalent water charges would create widespread effects on water savings farm income and collected government revenue across regions and districts

water and energy price impacts on residential water demand in copenhagen while water price effects on residential water demand have been studied for several decades the impact of energy prices does not seem to have received much attention in this paper a residential water demand function derived from a model of household production of final consumption goods taking water energy and an aggregate of other goods as inputs is estimated on pooled time series data we find negative energy cross price elasticities around 0 2 and water price elasticities in the order of 0 1 or smaller

split award auctions for supplier retention to stay abreast of current supply market pricing it is common for procurement managers to frequently organize auctions among a pool of qualified suppliers the supply base sole awards can alienate losing suppliers and cause them to defect from the supply base to maintain the supply base and thereby control the high costs of finding and qualifying new suppliers buyers often employ split awards which in turn inflate purchase costs this results in a trade off that we investigate in an infinite horizon stationary setting in which the relative cost position of each supplier is randomly drawn in every period we characterize the optimal split award that minimizes long run costs purchasing and qualification and show that maintaining a constant supply base size using a qualify up to policy is optimal for the buyer we find that neither the extent of multisourcing nor the buyer s value of split awards compared with winner take all auctions are monotonic in the qualification cost and that split award auctions can increase ex ante system buyer and supplier benefits simultaneously to our knowledge this is the first paper studying split award auctions for supply base maintenance and it will hopefully galvanize further research on this important topic this paper was accepted by yossi aviv operations management

sequential procurement auctions abstract two auctions are held in sequence with the possibility of learning between the second and the first the buyer optimally chooses to discriminate against the winner of the first auction in the second the optimal mechanism has a discontinuity in the winner s second bid this strictly dominates a sequence of independent sealed bid auctions

the design of procurement contracts this paper investigates the interaction between bidding for procurementprograms and fractional buys this problem is analyzed from the standpoint of a cost minimizing procuring agent it is shown that underimperfect competition a multiple source purchase is generally preferred to a single source contract similarly the author demonstrates that a strictly intermediate cost sharing arrangement i e an incentive contract dominates either the cost plus or the firm fixed price arrangements copyright 1986 by american economic association

second sourcing and the experience curve price competition in defense procurement we examine a dynamic model ofprice competition in defense procurement that incorporates the experience curve asymmetric cost information and the availability of a higher cost alternative system we model acquisition as a two stage process in which initial production is governed by a contract between the government and the developer competition is then introduced by an auction in which a second source bids against the developer for remaining production we characterize the class of production contracts that are cost minimizing for the government and that induce the developer to reveal private cost information when high costs are revealed these contracts result in a credible cutoff of new system production in favor of the still higher cost alternative system

privately operated water utilities municipal price negotiation and estimation of residential water demand the case of france this paper addresses the issue of price negotiation between a municipality and a private water utility operator and its implications for residential water demand estimation we use appropriate econometric procedures to estimate a water demand equation on a panel of french municipalities we find evidence that negotiated water price depends on municipality s characteristics causing endogeneity of price in the demand equation the impact of average household income housing and system features such as metering is investigated both on municipal consumption and price estimated price and income elasticities are significant and close to previous household level studies

estimation of substitution possibilities between water and other production inputs the traditional approach to measuring the demand for water by industries relies upon fixed water use coefficients water supply planners base decisions about system expansion partly upon fixed coefficients applied to projected levels of industrial growth among the restrictive assumptions implied by this approach is that producers are generally unresponsive to the relative price of water compared with other factors earlier studies focused on industry by industry assessments of present and potential water use technologies and the possibilities for substituting other productive inputs for water most of these studies are economic engineering in form thompson and young and russell are analyses of the steam electric generating industry and the petroleum refining and petrochemical industry respectively because they used linear programming techniques their results must be interpreted cautiously the flexible functional forms which have become

examining the differences in self and publicly supplied firms water demands this research examines the fac tors influencing the decision made by manufac turing firms regarding their source of water sup ply and tests whether self supplied firms exhibit demands for intake water different from firms supplied by a public utility the first stage of the estimation model involves a probit analysis of the supply source choice and the second stage employs a regression model with endogenous switching to estimate the demand equations for the two types offirms results indicate that eco nomic factors such as annual connection fees influence the supply source decision jel q25

demand side management policies for residential water use who bears the conservation burden to assess the potential for urban demand side management dsm policies as a water resource management tool we analyze the extent to which price and alternative policy instruments such as use and quantity restrictions and subsidies for water efficient technologies reduce residential demand and their distributional implications by type of household using detailed household level panel data for two california communities the results suggest that the ultimate effects of dsm policies in terms of the reduction in aggregate demand and distribution of water savings among household classes depend both on the policy instrument selected and the composition of aggregate demand

price elasticity of groundwater demand attenuation and amplification bias due to incomplete information measurement errors in both human and natural components of agricultural and environmental systems can be as much a source of estimation bias as omitted variables selfselection simultaneity and reverse causality nonetheless partly because of difficulties in obtaining data there is less literature on measurement error problems than on other endogeneity problems this article examines estimation bias in the price elasticity of groundwater consumption for irrigated agriculture on the intensive margin the price at issue is for the energy used in pumping and pressurizing water for delivery lacking the precise unit irrigation cost previous studies imputed irrigation costs we first consider groundwater irrigation costs and identify factors that can cause measurement errors in the process of imputation under incomplete information about the determinants of irrigation costs we follow this by systematically analyzing the potential bias caused by measurement errors using econometric theory along with monte carlo simulations where appropriate we then quantify actual measurement errors making use of a unique dataset in which energy and groundwater consumption data are matched for individual observations finally we compare regression results using exact irrigation costs as opposed to imputed ones we find evidence of substantial measurement errors resulting in attenuation and amplification bias in the price elasticity of irrigation water consumption on the intensive margin our results indicate that measurement errors in irrigation costs can lead to misleading policy implications related to water and energy pricing as a tool to conserve water we also show that estimating the energy price elasticity of groundwater use is not as straightforward as previously thought

modeling commercial demand for water exploring alternative prices instrumental variables and heterogeneity in this paper we introduce a previously unused instrumental variable to estimate the elasticity of commercial water demand for firms served by a large municipal utility we then present evidence that firms are more responsive to one period lagged average price than marginal price finally we find notable differences in elasticity among different categories of businesses the findings in this paper are particularly important as water utilities consider how to maintain revenue while coping with limited water supplies and increasing commercial demand

rain agriculture and tariffs this paper examines whether and how rainfall shocks affect tariff setting in the agricultural sector in a model of strategic trade policy the authors show that the impact of a negative rainfall shock on optimal import tariffs is generally ambiguous depending on the weight placed by the domestic policy maker on tariff revenue profits and the consumer surplus the more weight placed on domestic profits the more likely it is that the policy maker will respond to a rainfall shortage by reducing import tariffs these findings are robust to alternative assumptions about market structure and the timing of the game using detailed panel data on applied tariffs and rainfall for 70 nations the authors find robust evidence that rainfall shortages generally induce policy makers to set lower tariffs on agricultural imports

a discrete continuous choice approach to residential water demand under block rate pricing reply waldman is quite correct in noting that the microeconomic theory of block rate pricing in hewitt and hanemann hh 1995 is given for the general case of a k block rate structure whereas the econometric theory is largely confined to the case of exactly two blocks the extension in waldman to the more general case of k blocks is correct although the extension itself could be even more general if it addressed the nonnegativity of demand as is demonstrated below that no apparent attention was paid to the nonnegativity of demand in hh may be attributed to the fact that the need to do so was negated by a fortuitous assumption in the earlier work although that assumption that the errors are multiplicative and lognormally distributed was only maintained and not tested in hh i now estimate two models with the more common assumptions of linear demand and additive and normally distributed errors both with and without a modification for

awarding monopoly franchises the authors analyze how to award a monopoly franchise when the objective is to maximize expected consumers surplus net of transfer payments to the producer potential producers initially possess independent private information about uncertain production costs only the chosen producer subsequently observes realized production costs after awarding the franchise to the producer with the lowest expected costs prices are optimally set above realized marginal cost these ex post distortions foster more competitive bidding ex ante the distortions for any bid cost pair are invariant to the number of bidders n though expected distortions and profits decline with n copyright 1987 by american economic association

environmental regulation and sustainable competitiveness evaluating the role of firm level green investments in the context of the porter hypothesis we investigate the impact of environmental regulation on firm performance and investment behavior exploiting the case of a german water withdrawal regulation that is managed on the state level we analyze firms reactions to an increase in the water tax using a regression adjusted difference in differences approach we analyze the individual firm s response to a change in environmental regulation distinguishing between add on and integrated environmental investments this allows us to include innovation diffusion into our analysis which is likely to be of importance for increasing resource efficiency our results show that the regulation in question shows no sign of affecting firms overall competitiveness the results imply that the predicted negative impact of the regulation on firms economic performance that was brought up before the introduction of the tax does not seem to weigh heavily in this case nevertheless when placed into a sustainable competitiveness context the regulation considered does not qualify as an appropriate policy tool for fostering green growth

dual sourcing in repeated procurement competitions the issue of maintaining competition over time in a repeated procurement setting is important for both government and private sector buyers the u s department of defense has experimented with splitting production quantities between two or more contractors in an effort to make government business more attractive for the private sector this paper analyzes the effectiveness of this strategy we find that in a two period model with production learning and entry costs dual sourcing even for the specific mechanism we consider in some cases reduces overall expected cost moreover if buyers are unable to commit to long term contracts or suppliers are unable to bid away anticipated gains the incentives to dual source are often stronger

water reuse in brazilian manufacturing firms this article examines the factors influencing manufacturing firms water reuse decision and analyses whether the structure of intake water demand differs between firms that adopt water reuse practices and those which do not the first stage of the estimation model involves a probit analysis of the water reuse decision and the second stage employs an endogenous switching regression to estimate the intake water demand equations results suggest that water charges may act as an effective mechanism in inducing firms to undertake water reuse investments and in reducing intake water demand estimates of the water demand price elasticities indicate that plants that reuse water are more sensitive to water price increases than plants without access to reuse technologies

evaluating the welfare effects of reforming municipal water prices abstract despite the strong criticisms by economists of water utility pricing practices and the presence of well articulated theoretical models of efficient pricing alternatives few empirical studies have documented the magnitude of the efficiency gains from altering water prices the structures of water supply costs and water demands are estimated using data from vancouver canada a simulation program uses these estimated relationships to compute the impact upon a representative water utility s output and deficit and upon aggregate consumer surplus of a move from its current practice to efficient prices simulation results show that a move to seasonally differentiated pricing with an annual charge calculated to recoup the resulting deficit raises aggregate surplus by approximately 4 this result contrasts with recent water pricing studies that found welfare improvements of approximately 1

an analysis of risk and return in the defense market its impact on weapon system competition with growing austerity pressures from the administration congress and the general public the government s procurement policy has called for increased use of dual source competition as a means of reducing acquisition costs in practice however this policy has produced mixed results the cause seems to be an inadequate understanding of the peculiarities of competition in the government s market this paper examines the risk and return available in the defense market and relates it to the industry s propensity to compete the results show that intelligent observation of the industry s capacity utilization rate would contribute to the development of a more efficient acquisition policy

estimating the structure of industrial water demands the case of canadian manufacturing this study considers water use by canadian manufacturing firms the estimation of water demands is based on a detailed cross sectional survey of establishment level observations on water prices quantities and expenditures industrial water use is modeled as having four components intake treatment prior to use recirculation and discharge average values for the estimated own price elasticity for water intake range from 0 1534 to 0 5885 water recirculation is found to be a substitute for both water intake and water discharge this confirms that expanding the use of economic incentives e g effluent fees may be effective in encouraging firms to reduce their water use while increasing in plant recirculation

efficiency and equity in natural resources pricing a proposal for urban water distribution service this paper focuses on the design of optimal prices for urban water distribution service in this context pricing should be aimed at achieving efficiency equity financial aspects and or public acceptability and transparency the proposed tariffs are based on the theoretical frameworks suggested by ramsey 1927 and feldstein 1972 as a prior step estimations of urban water demands and water costs are carried out for the spanish municipality of seville finally an empirical comparison in welfare terms is conducted between the proposed tariffs and those applicable in the year 2000

an econometric estimation of industrial water demand in france this study investigates the structure of industrial water demand byestimating the derived demand for water on a sample of industrialestablishments located in the south west of france productiontechnologies are represented by short term variable cost functions andapproximated by a translog form industrial water use is modeled ashaving three components the quantity of water bought to a waterutility the quantity of autonomous water and the quantity of watertreated prior to use we include in this framework water effluents which are considered as a by product of the production process emittedby firms each of the three water components is treated as a separateinput and all are estimated as a system of simultaneous equations themodel is estimated on a sample of 51 industrial plants in the girondedistrict observed from 1994 to 1996 using seemingly unrelated regression sur and feasible generalized least squares fgls results ofestimations show that industrial firms are sensitive to water priceinputs network water elasticity is estimated at 0 29 it variesfrom 0 10 to 0 79 according to the type of industryconsidered autonomous water price elasticity is not significant elasticity for treated water is evaluated at 1 42 at themean sample and varies from 0 90 to 2 21 according to theindustry considered

evidence on the specification of price in the study of domestic water demand the development of lakefront property in northern wisconsin has prompted in several towns minimum frontage zoning stricter than the state standard such zoning generates an economic loss by constraining development development effect and an economic

analysing rationing policies drought and its effects on urban users welfare analysing rationing policies during drought the aim of this paper is to study the impact on consumers of rationing policies implemented during water shortages water scarcity gives rise to the need for rationing and various methods including supply cutoffs can be used a model is devised to quantify the welfare losses associated with qualitive and quantitive restrictions based on virtual prices and using the consumer surplus as a welfare measurement welfare variations for different users have been calculated to achieve the aim information relative to seville spain has been used analysing the drought period that took place in the first half of the 1990s it has been possible to observe the main source that led to welfare losses for each kind of user

split awards procurement and innovation in many procurement settings it is possible for a buyer to split a production award between suppliers in this article we develop a model of split award procurement auctions in which the split choice is endogenous we characterize the set of equilibrium bids and allocations for optimizing agents in an environment in which suppliers are fully informed about each other s costs split award equilibria simultaneously exhibit strong collusive features and cost efficiency properties despite the former property of the equilibria upstream investment considerations may lead a buyer to prefer a split award auction format to a winner take all auction format

water conservation policy analysis an interregional multi output primal dual optimization approach an interregional multi output normalized restricted equilibrium model of field crop agriculture is estimated within the context of a multistage programming based system estimation procedure implicit total economic cost functions endogenize behavioral opportunity adjustment costs of fixed and allocatable land and water resources crop specific marshallian water demand elasticities are estimated for restricted and unrestricted groundwater substitution environments and decomposed by water source elasticities are inelastic but water price policy reform can be an effective water conservation policy tool when groundwater use is unrestricted when groundwater use is restricted effective conservation policy requires more dramatic water price policy reform

dynamic business share allocation in a supply chain with competing suppliers this paper studies a repeated game between a manufacturer and two competing suppliers with imperfect monitoring we present a principal agent model for managing long term supplier relationships using a unique form of measurement and incentive scheme we measure a supplier s overall performance with a rating equivalent to its continuation utility the expected total discounted utility of its future payoffs and incentivize supplier effort with larger allocations of future business we obtain the vector of the two suppliers ratings as the state of a markov decision process and we solve an infinite horizon contracting problem in which the manufacturer allocates business volume between the two suppliers and updates their ratings dynamically based on their current ratings and the current performance outcome our contributions are both theoretical and managerial we propose a repeated principal agent model with a novel incentive scheme to tackle a common but challenging incentive problem in a multiperiod s