Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/74140 
Authors: 
Year of Publication: 
2007
Series/Report no.: 
Nota di Lavoro No. 92.2007
Publisher: 
Fondazione Eni Enrico Mattei (FEEM), Milano
Abstract: 
In this paper, distribution and welfare effects of changes in block price systems are evaluated. A method is discussed to determine, for a Marshallian demand function, equivalent variation in case of a block price system. The method is applied to analyze welfare and distribution effects of changing water prices in the Metropolitan Region of São Paulo. Results show that there is a trade off between average welfare and income distribution. A pro-poor price system may result in lower average welfare than a flat price system, but in higher individual welfare for the poor. Moreover, there is a trade off between revenues for the water company and income distribution. Even though pro-poor price systems may not be as good for average welfare as flat price systems, their direct effects on poverty are important. Introducing pro-poor price systems, however, may have financial consequences for the water companies.
Subjects: 
Water Demand
Welfare Economics
Equivalent Variation
JEL: 
D63
Q25
Q56
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.