Municipal stratification and its effectiveness in comparison to other vulnerable population identification instruments existent in latin america

Abstract

This article aims at discovering the elements behind the pricing of housing utilities in Colombia, which is a non-competitive market; therefore, it is exposed to various market failures such as excessively high prices and inadequate supply, among others. Hence, these aspects are controlled through regulatory instruments such as stratification through which a differential charge is made in the tariff in order to allocate subsidies to the marginalized sectors, this way guaranteeing universal access to these services. Consequently, and foremost, the State’s regulatory intervention will be analyzed, as well as its limits and the market distortions that are corrected through this, to further characterize the stratification model and the comparative regulatory analysis. The latter was made to look for evidence of more cost-effective regulatory alternatives for the selection of beneficiaries, in terms of equity and efficiency. Equity will be evaluated in terms of errors that can be done in the selection process, while efficiency through the result of a comparative analysis of the opportunity cost that the different actors face when applying these methodologies. To conclude, this article presents a proposal for a subsidy allocation scheme.