A convergence assessment of water price rates: evidence from major U.S. cities

Abstract

In this paper we examine whether there is a convergence among residential water price rates for thirty major U.S. cities over the period 2010–2017. By utilizing the methodological framework by Phillips and Sul (Econometrica 75:1771–1855, 2007, J Appl Econom 32:1039–1042, 2009) we test for the existence of convergence clubs among cities’ water pricing policies. We identify the existence of convergence clubs which are based on different consumption markets. The estimated transition paths reveal a tendency of policy makers to increase water price rates over the examined period, which is more pronounced for lower consumption markets. © 2018, Springer-Verlag GmbH Germany, part of Springer Nature.