ABSTRACT
The use of progressive public utility rates is one method by which several developing countries are attempting to redistribute income. In several cities of Venezuela, Colombia and Malaysia, for example, domestic water is priced at increasing-block rates, rather than the decreasing-block rates which are so common in the United States. This chapter examines the efficiency of progressive utility rates as an income-redistribution mechanism through the analysis of a unique survey of domestic water consumers in Penang, Malaysia. It examines the conceptual rationale for progressive utility rates. The chapter presents an evidence for income-elasticity and price-inelasticity with particular emphasis on developing countries. It presents empirical evidence on income redistributed through the progressive water rate structure in Penang.
