Economic Modelling of Water Supply: An Econometric Analysis of the Multiproduct Firm

摘要

Research was conducted to develop a comprehensive economic model that could use the neoclassical theory of the multiproduct firm to analyze the production structure of water supply. The project attempts to meet the need for in-depth analysis of the cost and economic structure of water supply. The cost structure of the water supply industry was estimated using the recently refined translog function. Issues addressed included restrictive specifications for water supply technology, input demand function for water supply, scale economies, marginal costs and output supply, and pricing of water and the presence of cross subsidization among residential and nonresidential users. Findings of this research represents the first attempt to apply the translog production function in the water supply area.