Price Regulation Based On Performance of Iranian Water and Wastewater Companies

Ebrahimi Nourali, Alireza; Emami, Karim; Mohammadi, Teymour

doi:10.22054/joer.2020.49977.837

Document Type : Research Paper

Authors

¹ Economics Doctoral Student, Faculty of Management and Economics, Azad University, Branch of Science and Researches, Tehran, Iran

² Economics Professor, Faculty of Management and Economics, Azad University, Branch of Science and Researches, Tehran, Iran

³ Economics Professor, Faculty of Economics, Allame Tabatabaei University, Tehran, Iran

https://doi.org/10.22054/joer.2020.49977.837

Abstract

The purpose of this paper is to design a unique pricing system (price-cap) for Iran's water and wastewater industry to ensure fair pricing for its customers, encourage effective investment planning, and improve corporate productivity and efficiency. To this end, the translog frontier cost function form using the panel- data of thirty-five (35) water and wastewater companies over the period 2012-2017 is used to calculate the aforementioned components and X-factor and use it in the price-cap model for a five-year period, has been used. The price ceiling decreasing for the most efficient company was 2% and for the most inefficient company was 28%. In other words, in the first year of implementation of the price ceiling adjustment model, the most efficient water and wastewater company will be allowed to decrease its base or initial price by 2%, but the most inefficient company will be allowed to more decrease by 28%. It is this incentive that fulfills the purpose of implementing the price-cap model as an incentive regulation method.

Keywords

20.1001.1.1735210.1399.20.79.5.2

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Economics Research

Price Regulation Based On Performance of Iranian Water and Wastewater Companies

References

References

Volume 20, Issue 79
January 2021
Pages 185-224

Price Regulation Based On Performance of Iranian Water and Wastewater Companies

References

References

Volume 20, Issue 79January 2021Pages 185-224

Volume 20, Issue 79
January 2021
Pages 185-224