The market behaviour of local utilities in pre-World War I Britain: the case of gas
m he development of the urban infrastructure and related services was a 1 major feature of Britain in the 40 years or so before the First World War. While national output was growing at i.8 per cent per annum in I873I9I3, the services sector's output was growing at some 2.3 per cent. Within the latter, gas, electricity, and water experienced increases in labour and capital inputs above 3 per cent per annum and, with total factor productivity growing at i.6 per cent per annum, the overall rise in output was 5.I per cent per annum.2 Yet little is known about the general characteristics of these local utilities. Moreover, analysing the market behaviour of local utilities is an important building block in understanding the growth of the public sector in Britain. Many of the services provided by local utilities exhibited problems both of externalities and of natural monopoly. In the case of water works in Britain, the USA, and Germany the pattern of growth was linked partly to questions of public health and amenities but the growth of income levels was perhaps just as important.3 In the case of gas, in addition, the generation of financial surpluses to relieve the rates has been seen by many as a strong inducement to municipalization. The undertakings had many choices to make; whom to supply, what volume, which areas? Were they simply interested in profit, or were their operations influenced more by empire-builders concerned with the growth of sales, or, especially in the case of municipals, were they reflecting the electoral interest of the councils by reaching as many consumers as possible? They were constrained both by their local environment (access to coal and labour, levels of income) and, nationally, by price regulation. How did these constraints affect their behaviour? There are now several original studies linked to particular localities and several samples of undertakings have been examined but without any detailed analysis either of the determinants of prices and costs or of the statistical significance of the results.4 This paper focuses on the behaviour of local