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Distribution, Equity and Domestic Water Charging Regimes: The Case of Scotland
Author(s) -
McMaster Robert,
Mackay Daniel F.
Publication year - 1998
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/1467-8292.00074
Subject(s) - redistribution (election) , equity (law) , economics , allocative efficiency , context (archaeology) , distribution (mathematics) , inequality , public economics , natural resource economics , microeconomics , geography , political science , mathematical analysis , mathematics , archaeology , politics , law
This paper argues that charging for a merit good, such as water, raises important distributional concerns. More direct charging is likely to demonstrate a pronounced impact on poorer sections of society. Arguably, this carries potentially adverse allocative efficiency effects. Following Hochman and Rodgers’ (1969) thesis that wealthier individuals may benefit from the redistribution of income to the poor; the regressive pricing of merit goods will engender external costs. We argue that this is likely in the context of domestic water provision in Scotland. On this basis we evaluate the comparative regressiveness of five alternative charging arrangements. Somewhat counter‐intuitively, our simulation results reveal that a flat rate licence fee may be marginally the least regressive of the five arrangements.