Date of Award
Summer 2024
Language
English
Embargo Period
7-26-2024
Document Type
Dissertation
Degree Name
Doctor of Philosophy (PhD)
College/School/Department
Department of Economics
Program
Economics
First Advisor
Cuicui Chen
Committee Members
Daiqiang Zhang, Michael Jerison, Chun-Yu Ho
Keywords
Water Infrastructure, United States, Regulator Preferences, Investment
Subject Categories
Environmental Studies | Industrial Organization
Abstract
The infrastructure of U.S. drinking water systems faces chronic issues of low quality and underinvestment. As the water utilities in the U.S. are typically managed and regulated at the local municipal level, investment levels depend on the municipal regulator's preferences. Drawing from a dynamic framework, I specify and estimate the local regulators' objective function over drinking water infrastructure investment. This framework highlights the tradeoff between profit and consumer surplus and reveals how regulator preferences can deviate from net surplus optimization, resulting in underinvestment. My findings provide significant evidence that the drinking water infrastructure is underinvested. I reveal that the regulator's higher preference weight on utility profit over consumer surplus leads to a social welfare loss of 38 thousand dollars per utility per year. My counterfactual analyses proposes two policy strategies to fix this loss, including subsidies for water utility and technological advancements.
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
Recommended Citation
Guo, Chunyu, "Regulator Preferences and Underinvestment in Drinking Water Infrastructure" (2024). Electronic Theses & Dissertations (2024 - present). 19.
https://scholarsarchive.library.albany.edu/etd/19