• Environmental and Resource Economics Review
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• v.18 no.4
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• pp.695-713
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• 2009

This study investigates the determinants of municipal water prices and costs in Korea. A panel data set of 164 municipalities for the period 2000~2007 is used for the study. Both random and fixed effect models with an appropriate set of instruments are applied to the data. Substantial differences in prices and costs among municipalities are observed. The study finds that prices and costs increase if the leakage rate is high, the quality of primary water is bad, and the municipality has to purchase primary water from K-water which is the single creation and management corporation of water resources facilities in Korea. Prices and costs decline if the size of consumer is large, the proportion of paying consumer is high, and the amount of subsidy from the central government is large.