How will private utilities work? After all, there is only one pipeline, so how can water be supplied to everyone at different prices?

анонимный вопрос

I answered a similar question in quite some detail analyzing all stages of water supply in a free market, from finding a water source to its delivery via pipes to the end consumer. But you are not so much interested in how various market actors will negotiate the coordination of geological exploration, extraction, pipe laying, and repair—but rather what mechanisms will affect the tariffs for the end consumer. And, presumably, you have a concern that without central controlling bodies, tariffs will skyrocket.

Here, I suggest you familiarize yourself with the analysis of such a mechanism for electricity supplies that I provided previously. For the water market, the hard upper limit for tariffs turns out to be the cost of water production or supply by the consumers themselves: this could be buying bottled water in a store, collecting rainwater, desalination, recycling—depending on who the consumer is. But slightly before the price hits this natural barrier, the factors of competition and demand elasticity will kick in: expensive water will be conserved, and at a certain point, the supplier will realize that it is more profitable to earn from volume rather than markups, especially if alternative water suppliers do not jack up their prices and seize the market while the miser tries to squeeze their few remaining clients dry.

At the same time, of course, I do not rule out that water will be supplied to different houses by one company at different prices, taking into account the length of the pipes, for example, or the different competitive environment in different districts. Finally, a price markup is also added by the company that manages the building, if such a company exists. For instance, in Thailand, where I vacationed in the spring, it seems that every condominium has its own water price, because in one they water the garden, in another the pool is larger, in a third it is smaller, and so on. This is normal.

Here is an example of a condominium where water will certainly be expensive