Regulatory politics in user prices: Evidence for the Portuguese water industry

Abstract

This study explores the relationship between economic regulation and user prices in the Portuguese water industry. The empirical analysis demonstrates that economic regulation based on the rate of return model is attached to higher user prices in a comparison with the other organizations that are directly dependent on political decisions. Moreover, comparisons between operators through benchmarking might have an impact on user prices. In addition, this study shows that a stronger prediction of user prices exists when considering the adopted management model for the delivery of water services. Main findings: The managerial element is not a primary goal, instead, the political option still prevails for user prices.