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Prices versus rationing: Marshallian surplus & mandatory water restrictions (185kb)

A study which reviews water restrictions currenly in place in Australia and estimates the welfare losses associated wtih water rationing.

The paper includes:
- A review of the existing studies from Australia and
internationally to estimate the welfare losses associated with water rationing.
- Estimates of an aggregate per capita daily water demand for Sydney.
- Calculation of the difference in Marshallian surplus from using market-clearing price versus water restrictions
- Provides a sensitivity analysis about the estimates and gives a brief discussion about the implications of the results.
- Concluding remarks

 

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