Study On Price Regulation In Water Industry

Water is the irreplaceable resource that the mankind depends on for existence, which determines that the government should regulate the water price. However, there are two problems under the water price regulation in China at present. On one hand, in the situation that the water resource in short has already become a global question paid close attention to together, the wasting phenomenon is very general in our country that is a developing country of poor water. The wasting behavior in water industry is that the enterprise has not drive to reduce the leaking and losing rate of water pipelines, which aggravates the imbalance between water supply and water demand. On the other hand, asymmetric information between the regulator and the enterprise that natural monopoly in water industry leads to could not be resolved in effect, which contains that the enterprise conceals the real cost and that the enterprise produces implicit output. This paper studies price regulation in water industry mainly from the theory analysis of price regulation in water industry, the method analysis of price regulation in water industry, the mechanism analysis of price regulation in water industry and recommending some relevant policies of price regulation in water industry. This paper contains following studies and results: (1) In the theory analysis and the method analysis of price regulation in water industry, after concluding systemically characters of water industry, the experience of price regulation in water industry of other countries and disadvantages for price regulation in water industry of China, this paper considers that the enterprise conceals the real cost, implicit output and the leaking and losing rate of water pipelines should be settled. (2) In the mechanism analysis of price regulation in water industry of China, we develop a price regulation model at the standpoint of government, which makes the enterprise tell the real cost to the regulator and avoids implicit output. Moreover, the enterprise will raise the efficiency and low the leaking and losing rate of water pipelines through this model, if explicit output that government makes is less than or equal to implicit output that government makes based on the information government holds at present. (3) At last, we put forward some relevant policies on the basis of the front chapters.