Measuring the dynamic efficiency costs of regulators' preferences: Municipal water utilities in the Arid West
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Evidence suggests that municipal water utility administrators in the western US price water significantly below its marginal cost and, in so doing, inefficiently exploit aquifer stocks and induce social surplus losses. This paper empirically identifies the objective function of those managers, measures the deadweight losses resulting from their price-discounting decisions, and recovers the efficient water pricing policy function from counterfactual experiments. In doing so, the estimation uses a "continuous-but-constrained-control" version of a nested fixed-point algorithm in order to measure the important intertemporal consequences of groundwater pricing decisions.
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Professor of Economics
Christopher D. Timmins is a Professor in the Department of Economics at Duke University, with a secondary appointment in Duke’s Nicholas School of the Environment. He holds a BSFS degree from Georgetown University and a PhD in Economics from Stanford University. Professor Timmins was an Assistant Professor in the Yale Department of Economics before joining the faculty at Duke in 2004. His professional activities include teaching, research, and editorial responsibilities. Professor Timmi