Deregulated private water supply: a policy option for developing countries

Developing nations that experience water supply shortage should consider privatizing and deregulating their water utilities. Government regulations have a tendency to restrict the utilities' capacity to recover their investments. This serves as a disincentive to offering connections to a large portion of the population, usually the people in the lower-income bracket. However, an unregulated, private entity would be motivated to increase its client base to gain bigger profits. The ill effects of a monopoly may be countered through price discrimination.