Distributional Effects of Price Reforms in the Italian Utility Markets

In this paper, we analyse some distributional effects of the reforms to water and energy services in Italy. We first document the new regulation setting in these services, illustrating the dynamics of utility prices and of household expenditure in the period 1998-2005. We then propose a way to measure the affordability of public utilities, in order to investigate how many households would incur a potentially excessive burden if they consumed a minimum quantity of utility services. Finally, we calculate this index on data from the Survey on Family Budgets ("Indagine sui consumi delle famiglie"). Our results show how the affordability of utility bills varies from region to region depending on climate, income, family endowment and family size. The analysis - also based on a counterfactual exercise - finds that so far, utility reforms do not seem to have produced any negative effects on weaker households. Copyright (c) 2008 The Authors.