Does market concentration affect prices in the urban water industry?
This paper analyzes the relationship between market concentration in the private segment of the water industry and water prices with a sample of municipalities located in the Southern Spanish region of Andalusia. In doing so, several Heckman sample selection models are estimated with the main finding being that market concentration increases the price of water for residential use charged by private companies. The main policy recommendation is that urban water service privatization must be accompanied by the appropriate regulatory and institutional frameworks to promote competition among businesses and monitor water pricing.
Legislative reforms and market dynamics in the provision of urban water service by private contract operators in Spain
Abstract This paper studies the dynamics of concentration in the Spanish market for the provision of urban water service by private contract operators in the 2000–2020 period. The market is highly concentrated. Concentration increased until 2007, at which point it started to decline when Law 30/2007 on Public Sector Contracts and Organic Law 8/2007 on Political Party Financing were passed; before rising again from 2016 onwards. This latter trend results from strategic behaviour by the two leading operators, acquiring smaller companies with a notable presence in some regional markets. Further legislative reforms aimed at safeguarding space for competition are thus proposed.
Contract Renewal in Urban Water Services, Incumbent Advantage, and Market Concentration
Contract renewal with the incumbent is common practice in the contracting-out of public services. It could, however, affect competition by reinforcing trends towards market concentration. This article contributes empirical evidence on the determinants of the result of public tenders for the renewal of private provision of the urban water service. A dataset with information on 215 public tenders held in Spain between 2008 and 2019 is employed. The methodology is grounded in logistic regression techniques. The findings indicate that incumbents' size does not play a role in the proba-bility of alternating between service providers. Furthermore, competition−proxied by the number of bidders−and …
The dynamics of privatization and regulation of water services: a comparative study of two Spanish regions
As in other economic activities, privatization of water delivery has not resulted in the retreat of the public sector, but rather a change in the way in which the government intervenes in the water industry. This paper illustrates this situation by comparing urban water services in two Spanish regions, Andalusia and Catalonia. Water service delivery is structured very differently in these two regions with respect to private involvement, the degree of market concentration and, as a result, problems in competition. The characteristics of the two regions' respective regulatory agencies reflect the different paths taken to privatization: in Catalonia private firms have much more tradition and o…