Public versus Private Water Delivery: Cost Comparisons

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Abstract
We respond to criticisms raised by Robert McGuire and Robert Ohsfeldt concerning our comparative cost study of regulated private and public water delivery firms, Review of Economics and Statistics (November 1983). Summary results from our subsequent and ongoing research are included as empirical responses to their econometric questions. Model replications estimated from superior data confirm the 1983 results, that pooling of public-private cost functions cannot be rejected. In addition to conceptually defending our study methodology, we argue that cost comparisons, although difficult, are a legitimate means of assessing effects that alternative ownerships may have on production of water delivery services.