TY - JOUR
T1 - Equity, efficiency and financial viability
T2 - public-utility pricing with special reference to water supply
AU - Ng, Yew‐Kwang ‐K
PY - 1987/9
Y1 - 1987/9
N2 - The pricing and investment policies of a public enterprise should be designed to achieve efficiency since equity is better pursued by general policy regarding income distribution. Short‐run marginal‐cost pricing does not generally lead to long‐term deficit, but may involve price and surplus/deficit cycles for the case with lumpy investments and growing demand, where the price increases with demand but is reduced with capacity expansion. Taking account of the extra costs of government revenue collection and the likely average price/cost ratio in the economy, the third‐best pricing policy is likely to result in long‐term surplus, making the objectives of equity, efficiency and financial viability much more consistent with each other than is generally believed. This is particularly true for water with historically increasing costs of additional sources of supply. 1987 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research
AB - The pricing and investment policies of a public enterprise should be designed to achieve efficiency since equity is better pursued by general policy regarding income distribution. Short‐run marginal‐cost pricing does not generally lead to long‐term deficit, but may involve price and surplus/deficit cycles for the case with lumpy investments and growing demand, where the price increases with demand but is reduced with capacity expansion. Taking account of the extra costs of government revenue collection and the likely average price/cost ratio in the economy, the third‐best pricing policy is likely to result in long‐term surplus, making the objectives of equity, efficiency and financial viability much more consistent with each other than is generally believed. This is particularly true for water with historically increasing costs of additional sources of supply. 1987 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research
UR - http://www.scopus.com/inward/record.url?scp=84978558610&partnerID=8YFLogxK
U2 - 10.1111/j.1467-8462.1987.tb00669.x
DO - 10.1111/j.1467-8462.1987.tb00669.x
M3 - Article
AN - SCOPUS:84978558610
SN - 0004-9018
VL - 20
SP - 21
EP - 35
JO - The Australian Economic Review
JF - The Australian Economic Review
IS - 3
ER -