The Relationships Between Costs and User Charges: The Case of a Norwegian Utility Service
CESifo, Munich, 2003
CESifo Working Paper No. 1033
![](https://cesifo.org/DocImg/cesifo1_wp1033.jpg?c=1689237140)
The paper investigates the relationships between costs and user charges in the sewage industry in Norwegian local governments. The purpose of the analysis is to answer the following questions: (i) To what extent is a higher unit cost passed on to consumers in terms of a higher user charge? (ii) Does user charge financing lead to higher or lower unit cost? The econometric analysis indicates that around 40 per cent of a cost increase is passed on to consumers in terms of higher user charge. Moreover, user charge financing has a significant negative effect on the unit cost. An increase in the degree of user charge financing by 10 per cent-points is predicted to reduce the unit cost by 5-8 per cent.