This competitive situation was a common occurrence across America. There is, for example, always the threat of a takeover if the management does not perform. Ownership affects decision-making. Those who own the plant or who are directly responsible to the owners will have to make decisions on the basis of different 'cost structures' because they will be faced by information and opportunities that would be denied to state managers. The fact that there is only one water supplier does not mean he can charge a monopoly price.
People are apt to forget how easy it is to conserve water.
The third criteria, externalities, is no criteria at all. If the externalities are negative, then let the law enforce property rights. If the externalities are positive, so what. Tanner's article graphically demonstrates the extent of the Left's intellectual impoverishment, ignorance and culpability. No where did he evince the slightest understanding of markets or the role of entrepreneurship, savings, investment, prices, etc.