Ai az, Kame -Ainu e al.
A icle
In es iga ing he key ac o s in luencing he p o i abili y o
Romanian public wa e supply and sewe age se ices
Am i ea u Economic
P o ided in Coope a ion wi h:
The Bucha es Uni e si y o Economic S udies
Sugges ed Ci a ion: Ai az, Kame -Ainu e al. (2025) : In es iga ing he key ac o s in luencing he
p o i abili y o Romanian public wa e supply and sewe age se ices, Am i ea u Economic, ISSN
2247-9104, The Bucha es Uni e si y o Economic S udies, Bucha es , Vol. 27, Iss. 70, pp. 1209-1220,
h ps://doi.o g/10.24818/EA/2025/70/1209
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Am i ea u Economic ecomandă
AE
Vol. 27• No. 70 • May 2025 1209
INVESTIGATING THE KEY FACTORS INFLUENCING THE PROFITABILITY
OF ROMANIAN PUBLIC WATER SUPPLY AND SEWERAGE SERVICES
Kame -Ainu Ai az 1, Do in Jula 2, Oc a ia Moise 3, Geo ge Banghio e 4,
Diane Paula Co ina Vancea 5 and And eea Simona Săseanu 6
1),5) O idius Uni e si y o Cons an a, Cons an a, Romania
2) Ins i u e o Economic Fo ecas ing, Romanian Academy, Ecological Uni e si y,
Bucha es , Romania
3),4) Romanian Academy, School o Ad anced S udies o he Romanian Academy,
Doc o al School o Economics o he Na ional Ins i u e o Economic Resea ch
Cons an in C. Ki ițescu, Bucha es , Romania
6) Academy o Economic S udies, Bucha es , Romania
Please ci e his a icle as:
Ai az, K.A., Jula, D., Moise, O., Banghio e, G., Vancea
D.P.C. and Săseanu A.S., 2025. In es iga ing he Key
Fac o s In luencing he P o i abili y o Romanian Public
Wa e Supply and Sewe age Se ices. Am i ea u
Economic, 27(70), pp. 1209-1220.
DOI: h ps://doi.o g/10.24818/EA/2025/70/1209
A icle His o y
Recei ed: 16 Ma ch 2025
Re ised: 8 May 2025
Accep ed: 5 June 2025
Abs ac
This pape explo es he dynamics o he public wa e supply and sewe age se ice in
Romania, ocusing on he ela ionships be ween di e en ope a ional, comme cial and
inancial a iables and hei impac on he ope a ing p o i a e. The aim o he pape is o
analyze he in e ac ions, bo h in he sho and in he long e m, be ween hese economic
a iables, using an ad anced econome ic me hodology, by applying he ARDL
(Au o eg essi e Dis ibu ed Lag) model. The analysis was ca ied ou on a da ase o 11
annual cycles, allowing o assess he s abili y and dynamics o he ela ionships s udied. The
esul s indica e a posi i e co ela ion be ween wa e in as uc u e expansion and he a e o
p o i , sugges ing ha in es men s in ne wo k leng h can con ibu e o he economic g ow h
o he sec o . In con as , a i inc eases showed a long- e m nega i e impac on he p o i
a e, e lec ing consume s' sensi i i y o p ice changes. E icien managemen o non- e enue
wa e and damage educ ion we e also ound o be key o imp o e inancial pe o mance and
inc ease sus ainabili y. The pape p o ides an in-dep h unde s anding o ma ke mechanisms
and can suppo he de elopmen o mo e e ec i e public policies o wa e esou ce
managemen in he con ex o cu en socio-economic and en i onmen al challenges.
Au o de con ac , And eea Simona Săseanu – e-mail: [email p o ec ed]
This is an Open Access a icle dis ibu ed unde he e ms o he C ea i e Commons
A ibu ion License, which pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any
medium, p o ided he o iginal wo k is p ope ly ci ed. © 2025 The Au ho (s).
AE
In es iga ing he key ac o s in luencing he p o i abili y
o omanian public wa e supply and sewage se ices
1210 Am i ea u Economic
Keywo ds: wa e supply managemen , p o i abili y, PMG/ARDL modeling, a i impac ,
in as uc u e, sus ainabili y.
JEL Classi ica ion: C19, D49, E21, H41, Q25.
In oduc ion
Whe he we a e en i onmen ally o ien ed o no , sus ainabili y is now a opic ha needs
mo e a en ion. I is conce ned o ob ain p o i while conse ing na u al esou ces, and
economic and poli ical decision-make s need o unde s and ha hei o ganiza ions will no
be able o su i e (on hei own) i hey do no pay mo e a en ion o how hey use o en
limi ed esou ces (Jo a e al., 2020).
Wi hin Romania's cu en economic landscape, he public wa e supply and sewe age
se ice plays an impo an ole, bo h in e ms o he essen ial se ices i p o ides and in
e ms o i s economic impac on he ope a o s in ol ed. This s udy aims o explo e he
economic dynamics o his sec o , ocusing on he analysis o he ope a ing p o i a e o
he wa e ac i i y o e he pe iod 2013-2023. By iden i ying ends and luc ua ions, he
esea ch in ends o p o ide a b oad pe spec i e on he e iciency and p o i abili y o
egional wa e ope a o s ac oss he coun y.
While in es iga ing key a iables such as he numbe o pipeline ailu es, which may
e lec he echnical condi ion and in as uc u e in es men needs, he s udy also pays
pa icula a en ion o consump ion measu emen ools such as me e s ins alled a economic
agen s and ins i u ions as well as a household consume s. These a e essen ial indica o s o
billing e iciency and cos eco e y. The leng h o wa e ne wo ks is also analyzed in he
con ex o he ex ension and main enance needed o ensu e a quali y se ice. The o al
ope a ing expenses o he wa e ac i i y and he e enues gene a ed om he same ac i i y
a e also analyzed o de e mine how hey in luence sec o p o i abili y. Fu he mo e, he
s udy also add esses he issue o non- e enue wa e , which is key o unde s anding
sys emic losses and o e all e iciency. The a e age wa e a i and ope a ing a e o e u n
on wa e ac i i y a e examined o unde s and he impac o p icing policies on he inancial
sus ainabili y o ope a o s.
Th ough his comp ehensi e analysis, he esea ch aims o iden i y co ela ions and ends
ha can be used o o mula e policy ecommenda ions o op imizing he pe o mance o
he wa e supply sec o , hus con ibu ing o a be e unde s anding o he economic con ex
and o he de elopmen o sus ainable public policies. In addi ion o he in oduc ion o
many speci ic ac o s in luencing he p o i abili y, he no el y o his s udy lies in he use o
he PMG/ARDL (Pooled Mean G oup/Au o eg essi e Dis ibu ed Lag) econome ic model.
This is a panel analysis ha combines he lexibili y o modeling in ime and space wi h he
abili y o dis inguish be ween sho - un and long- un dynamics.
Am i ea u Economic ecomandă
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Vol. 27• No. 70 • May 2025 1211
1. Li e a u e e iew
Recen s udies emphasize ha implemen ing sus ainable p ac ices can lead no only o
imp o ed en i onmen al p o ec ion bu also o enhanced inancial pe o mance o
co po a ions. Amee and O hman (2012) highligh ha i ms ha adop high-pe o ming
sus ainable p ac ices expe ience be e inancial pe o mance, an obse a ion ha
unde sco es he impo ance o in eg a ing hese p ac ices in o he s a egic planning o
wa e companies. In well as he inancial aspec s, esou ce e iciency is becoming essen ial
o he long- e m sus ainabili y o he sec o . A numbe o s udies sugges ha imp o ed
indica o s o wa e use con ibu e o mo e e icien conse a ion and inc eased p oduc i i y,
an impo an issue o Romanian wa e ope a o s acing challenges ela ed o making
consump ion mo e e icien and minimizing losses (Pe ei a, Co de y and Iaco ides, 2012).
Roca and Sea cy (2012) show ha co po a e sus ainabili y epo s, h ough he indica o s
hey e eal, p o ide an impo an assessmen basis o anspa ency and commi men o
sus ainable p ac ices. In a simila con ex , Ahi and Sea cy (2015) discuss he impo ance o
in oducing a ma hema ical model o assessing sus ainabili y in g een and sus ainable
supply chains, emphasizing he need o an accu a e and di e si ied pe o mance
assessmen ha also includes wa e and ene gy consump ion aspec s. Wada and Bie kens
(2014) in oduce a new indica o , he wa e esou ce sus ainabili y index ha assesses he
unsus ainable use o wa e esou ces a he global le el, a ele an pe spec i e o assessing
he impac s o excessi e wa e ex ac ion in Romania.
The adop ion o ele an global and local indica o s, such as hose p oposed by D'In e no,
Ca osi and Romano (2021), which in eg a e sus ainabili y and quali y o se ice measu es
in pe o mance assessmen , can suppo Romanian egional wa e ope a o s o imp o e no
only hei economic e iciency bu also hei con ibu ion o sus ainable de elopmen goals.
The e iew o he li e a u e in he ield o wa e supply managemen highligh s a g owing
in e es in pe o mance assessmen o wa e and was ewa e in as uc u es and p i a e
sec o in ol emen in his ield, which a e essen ial o unde s anding he complexi ies
associa ed wi h e icien and sus ainable wa e esou ces p o ision. Recen s udies add new
insigh s in o he ways in which public-p i a e pa ne ships (PPPs) and R&D in es men s
can in luence he pe o mance and sus ainabili y o wa e se ices (Chan and Ameyaw,
2013; Chan e al., 2015; Cheung and Chan, 2011). In ano he egis e , T ujillo and Es ache
(2005) discuss in as uc u e pe o mance in de eloping and ansi ion economies,
emphasizing he impo ance o s uc u al e o ms o inc easing p oduc i i y in u ili ies.
These issues a e impo an o unde s anding how policies and egula ions can in luence he
e iciency o he wa e supply sec o (Xu, Chen, Zhu, & Zhu, 2022).
These s udies, h ough hei geog aphic and hema ic di e si y, illus a e he complexi y o
wa e esou ce managemen and he need o an in eg a ed app oach ha combines
echnical expe ise, inno a ion, and sensi i i y o he socio-poli ical con ex o p omo e
wa e managemen p ac ices ha a e bo h e icien , equi able and sus ainable.
2. Da es and me hodology
The aim o his s udy was o analyze he sho - and long- e m in e ac ions be ween
economic, inancial and en i onmen al a iables ha in luence he p o i abili y o public
wa e supply and sewe age se ices. To his pu pose, he ollowing objec i es we e se : a)
o iden i y he economic, inancial and en i onmen al ac o s ha may in luence he
AE
In es iga ing he key ac o s in luencing he p o i abili y
o omanian public wa e supply and sewage se ices
1212 Am i ea u Economic
p o i abili y o public wa e supply and sewe age se ices; b) o in es iga e he sho - and
long- e m dynamic ela ionships be ween he selec ed a iables, using he ARDL model.
To achie e hese objec i es, we o mula ed he ollowing esea ch hypo heses:
Hypo hesis 1: The enla gemen o he wa e supply and sewe age in as uc u e is
posi i ely co ela ed wi h he inc ease in p o i abili y o he sec o in Romania.
Hypo hesis 2: The e is a nega i e ela ionship be ween inc eased a i s o wa e se ices
and hei accessibili y o he popula ion.
Hypo hesis 3: The implemen a ion o mode n echnologies in wa e esou ces managemen
leads o a signi ican imp o emen in e iciency and a educ ion in non- e enue wa e .
One o he mos impo an inancial indica o s used is he ope a ing p o i a e o he
wa e ac i i y (RP ), which measu es he pe cen age o p o i ea ned om he ope a ing
e enues o he wa e ac i i y. This indica o is essen ial o assessing he e iciency wi h
which esou ces and expendi u e a e managed in wa e ac i i ies. The a e age wa e a i
(WT) is ano he ele an inancial indica o , ep esen ing he a e age p ice pe cubic me e
cha ged o consume s. I di ec ly in luences he o al ope a ing e enues o he wa e
ac i i y (VE), which oge he wi h he o al ope a ing expenses o he wa e ac i i y (CE)
comple e he inancial pic u e o he sec o . Analyzing hese a iables allows us o
unde s and no only he cos s uc u e, bu also he capaci y o he sec o o gene a e
su icien e enues o co e expenses and o in es in main enance and expansion o
se ices. F om a echnical pe spec i e, he o al leng h o wa e ne wo ks (LRA) p o ides
insigh in o he ex en o in as uc u e ha needs o be main ained and upg aded. A he
same ime, he numbe o pipe ailu es (A C) is a c i ical indica o o he echnical
condi ion o he ne wo k, e lec ing he equency and se e i y o inciden s ha may a ec
he con inui y and quali y o wa e supply se ice. Non- e enue wa e (NRW), exp essed as
a pe cen age, indica es he olume o wa e los h ough leakage, he o inaccu a e
me e ing and is a ba ome e o he e iciency and in eg i y o he ne wo k. In e ms o he
comme cial a iables, he numbe o me e s ins alled a Consume s, Economic Agen s and
Ins i u ions (CAE) and Household Consume s (CCC) a e essen ial o moni o ing wa e
consump ion and accu a e billing. They help o op imize e enues and educe non- e enue
wa e , while ensu ing anspa ency and equi y in ela ions wi h consume s.
The combina ion o hese indica o s p o ides a solid basis o assessing he pe o mance o
he public wa e supply and sewe age se ice and o iden i ying oppo uni ies o imp o e
e iciency and sus ainabili y. This de ailed analysis no only suppo s he o mula ion o
app op ia e policies and s a egies, bu also acili a es he dialog be ween he s akeholde s
in ol ed, om egula o s and ope a o s o inal consume s.
The indica o s used in his analysis, which includes all egional public ope a o s in
Romania (43 ope a o s), ha e been ex ac ed om he Benchma king Repo s o hese
egional ope a o s co esponding o he pe iod 2013-2023.
Rega ding he na u e o he da a se ies, subjec o he small size in ime o he analyzed
se ies, uni oo es s ejec he null hypo hesis (as a join p ocess, o as indi idual
p ocesses) a he p < 10-4 h eshold o he A C (pipeline ailu es) and NRW (non- e enue
wa e ) se ies. Fo he emaining da a se ies, he es s do no ejec he uni oo null
hypo hesis, and all es s ejec he uni oo o he se ies calcula ed by di e encing.
Al hough he es s a e no all conco dan , he unce ain y gene a ed by he non-conco dance
Am i ea u Economic ecomandă
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Vol. 27• No. 70 • May 2025 1213
o he uni oo es s in he panel does no gene a e p oblems o he econome ic modeling,
as long as all es s ejec he non-s a iona i y hypo hesis o he di e enced se ies, i.e. he
se ies a e no I(2), and he models used a e o he Pooled Mean G oup/Au o eg essi e
Dis ibu ed Lag Models (PMG/ARDL) ype.
Using econome ic models, we e alua ed he impac o some sys em a iables on he
ope a ing p o i a e o he wa e ac i i y (RP ). The p o i a e is calcula ed (equa ion 1)
based on he o al ope a ing e enue (VE) and he o al ope a ing expenses o he wa e
ac i i y (CE).
VE CE
RP 100
VE
(1)
Since he linea co ela ion coe icien s be ween he numbe o me e s a business and
ins i u ional consume s (BEC) and he numbe o me e s a household consume s (HCC)
exceed 0.8 (Table 1), we cons uc ed sepa a e models so ha he a iables on BEC, HCC
a e no simul aneously in he model including he leng h o he ne wo k.
Table no.1 Co ela ion coe icien s
RPR
CAE
CCC
LRA
AVC
NRW
TM
CE
VE
RPR
1
0.159
0.082
0.124
0.060
-0.015
0.009
0.068
0.149
CAE
0.159
1
0.859
0.839
0.657
0.061
0.110
0.887
0.890
CCC
0.082
0.859
1
0.832
0.614
0.031
0.237
0.809
0.800
LRA
0.124
0.839
0.832
1
0.714
-0.030
0.147
0.863
0.868
AVC
0.060
0.657
0.614
0.714
1
0.116
0.103
0.740
0.734
NRW
-0.015
0.061
0.031
-0.030
0.116
1
0.078
0.046
0.031
TM
0.009
0.110
0.237
0.147
0.103
0.078
1
0.253
0.232
CE
0.068
0.887
0.809
0.863
0.740
0.046
0.253
1
0.991
VE
0.149
0.890
0.800
0.868
0.734
0.031
0.232
0.991
1
Sou ce: Au ho s' calcula ions in EViews
The PMG/ARDL econome ic model used ep esen s an ad anced app oach o panel da a
analysis ha combines he lexibili y o modeling o e ime and space wi h he abili y o
dis inguish be ween sho - un and long- un dynamics. This me hodology is e y use ul in
he con ex o economic s udies ha analyze mul i-yea e ec s ac oss di e en en i ies o
g oups (in ou case egional ope a o s), allowing a de ailed analysis o how a iables
in e ac o e ime. The ARDL model allows he sepa a ion o long- un ela ionships om
sho - e m (conjunc u al) ela ionships, and he da a se ies can be s a iona y, o non-
s a iona y, in eg a ed o o de 1. By using he PMG/ARDL model o s udy he wa e supply
sec o , we can obse e no only he immedia e e ec s o changes in policy o ma ke
condi ions, bu also how hese changes in luence he sec o in he long e m.
3. Resul s
S a ing om he gene al o m o he PMG/ARDL model desc ibed by Pesa an, Shin and
Smi h, (1999, p. 625), in he o m ans o med by Jula and Jula (2019, pp. 265-270), o he
p o i a e, we ob ained he ollowing model:
AE
In es iga ing he key ac o s in luencing he p o i abili y
o omanian public wa e supply and sewage se ices
1214 Am i ea u Economic
RP i = αi·[RP i, -1 – β1LRA i, -1 – β2TMi, -1 – β3NRWi, -1 – β4(A C/LRA) i, -1] + [γ1,id(RP i, -1)
+ γ2,id(LRAi, ) + γ3,id(LRAi, -1) + γ4,id(NRWi, ) + γ5,id(NRWi, -1) + γ6,id(TMi, ) + γ7,id(TMi, -1)
+ γ8,id((A C/LRA)i, ) + γ9,id((A C/LRA)i, -1] + μi + δ + e (2)
whe e:
RP = ope a ing p o i a e o he wa e ac i i y (%)
LRA = o al leng h o wa e ne wo ks (hund eds o km)
TM = a e age wa e a i (RON/m3)
NRW = non- e enue wa e (%)
A C = pipe ailu es (hund eds o ailu es)
αi= coin eg a ion coe icien (i.e. equilib ium adjus men coe icien )
β1,..., β4= coe icien s in he long- un ela ionship
γ1,i, ..., γ9,i = coe icien s in he sho - un dynamics equa ion
μi= indi idual ( ime in a ian ) speci ic ixed e ec s
δ = speci ic ixed e ec s in ime (c oss-sec ion in a ian )
e = idiosync a ic e o .
The es ima ion esul s o he PMG/ARDL (1,1,1,1,1,1,1,1) model a e summa ized in
eg ession equa ion (3).
(3)
The long- un equilib ium ela ionship is:
RP = 0.9716·LRA – 1.1938·TM – 0.4364·NRW – 0.9696·(A C/LRA) (4)
All he coe icien s in he long- un equilib ium equa ion (equa ion 4) a e signi ican a a
h eshold < 10-4, and he e o co ec ion coe icien (-0.5159) is nega i e, subuni and
s a is ically signi ican (likewise a a h eshold < 10-4). This means ha an equilib ium le el
pe u ba ion is abso bed in he sys em in less han wo yea s (1/0.5159 ≈ 1.94).
The coe icien s o he impac o he o al leng h o wa e ne wo ks (LRA), he sha e o
non- e enue wa e (NRW) and he numbe o pipeline ailu es (A C) on he a e o e u n
(RP ) a e as expec ed.
Inc easing he o al leng h o wa e ne wo ks (LRA) by 100 km is associa ed, as a long- un
ela ionship, wi h an inc ease in he p o i a e by almos one pe cen age poin ( he
es ima o is 0.97 pe cen age poin s). We explain his dynamic by he ac ha he leng h o
he wa e ne wo k is posi i ely co ela ed (Table1) wi h he numbe o me e s a household
Am i ea u Economic ecomandă
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Vol. 27• No. 70 • May 2025 1215
consume s (CCC) and a consume s o economic agen s and ins i u ions (CAE), and hese
a iables in luence o al ope a ing e enues (VE). The ARDL model cons uc ed o hese
a iables is summa ized in equa ion 5.
(5)
The long- un ela ionship be ween he o al leng h o wa e ne wo ks (LRA) and he
numbe o me e s (CAE and CCC) is:
LRA = 0.6915·CAE + 0.1139·CCC (6)
The pa ame e s in he long- un equilib ium equa ion (equa ion 7) a e signi ican a a
h eshold < 10-4, and he e o co ec ion coe icien (-0.3269) is nega i e, subuni and
s a is ically signi ican (likewise a a h eshold < 10-4). This means ha a dis u bance in he
equilib ium le el is abso bed in he sys em in abou h ee yea s (1/0.3269 ≈ 3.06). In he
sho - un dynamics equa ion, only he ee e m (in e cep ) is signi ican .
Model (4) p o ides suppo o he in ui ion abou he posi i e di ec ion o he link be ween
LRA and RP , a leas , as a long- un ela ionship.
In he sho un, he impac coe icien o LRA on he p o i a e is s a is ically
insigni ican . This could be he e ec o ine ia in adap ing wa e anspo a ion
in as uc u e.
The a e age a i pe cubic me e o ne wo k wa e (TM) is nega i ely associa ed, as a
long- un ela ionship, wi h he p o i a e ( he impac coe icien is -1.19, acco ding o
equa ion 4). A possible explana ion o his esul could be he nega i e ela ion, bo h in he
long un and as a conjunc u al impac , be ween he numbe o households eques ing he
ins alla ion o me e s (CCC) and he dynamics o he a i pe cubic me e o wa e . This
ela ionship es ima ed by an ARDL model is summa ized in equa ion (7).
(7)
All model coe icien s a e signi ican a he 0.05 h eshold. The e o co ec ion coe icien
is nega i e, subuni (-0.8079) and s a is ically signi ican . The speed o eco e y om an
imbalance is high (1/8079 ≈ 1.24 yea s). The ela ionship (equa ion 8) in he long un is:
CCC = -0.002·TM (8)
The nega i e coe icien in he long- un equa ion (-0.002) and he nega i e coe icien in
he sho - un dynamics equa ion (conjunc u al impac , -2.3153 in equa ion 7) sugges he
nega i e eac ion o domes ic consume s o he inc ease in he pe cubic me e a i s o
wa e in he ne wo k.
AE
In es iga ing he key ac o s in luencing he p o i abili y
o omanian public wa e supply and sewage se ices
1216 Am i ea u Economic
The ARDL- ype ela ionship be ween he numbe o me e s o business and ins i u ional
consume s and he a e age a i pe cubic me e o wa e in he ne wo k is uns able ( he
coin eg a ion coe icien is nega i e, bu o e uni a y: -1.1335). Unde hese condi ions, we
es ima ed a simple coin eg a ion model be ween he wo a iables. The esul s a e
desc ibed in equa ion 10. As in he case o household consume s, his esul also con i ms
he nega i e, long- un, eac ion o consume s o inc eases in ne wo k wa e a i s.
(9)
To complemen he a gumen s ega ding he nega i e long- e m impac o he dynamics o
he a e age ne wo k a i on he a e o e u n, we analyze he link be ween he numbe o
connec ed consume s (CCC and CAE) and he o al e enues om he exploi a ion o he
wa e ac i i y (VE). The ARDL model is summa ized in equa ion 10.
(10)
The coe icien s in he long- un equilib ium ela ionship a e s a is ically signi ican a a
h eshold < 10-4, and he e o co ec ion coe icien is nega i e and subuni (-0.2748). The
long- un s able ela ionship is:
VE = 8508.95·CAE + 187.09·CCC (11)
This esul sugges s a posi i e impac o he numbe o connec ed consume s (households
and non-households) on he o al ope a ing e enue o he wa e ac i i y h ough a long- un
link. In he sho - un dynamics equa ion, he only s a is ically signi ican coe icien is ha
o he end a iable. The coe icien s a ached o he a iables d(CAE) and d(CCC) a e no
s a is ically signi ican bu , s eady s a e, ha e he expec ed sign, i.e., posi i e impac on he
e enue dynamics. Fo d(CAE), he s eady-s a e impac is 2312.4 - 1045.9 = 1266.5 > 0,
and o d(CCC): 2903.5 - 79.7 = 2823.8 > 0.
In conclusion, he nega i e long- un e ec o he inc ease in he a e age ne wo k wa e
a i on he ope a ing a e o e u n o he wa e ac i i y is explained by he ad e se
eac ion o po en ial consume s o he p ice inc ease, associa ed wi h he posi i e
ela ionship be ween he e olu ion o e enues and he numbe o me e s o household and
non-household consume s (economic agen s and ins i u ions). This e ec can be ampli ied
i he e a e al e na i es o consume s (e.g. p i a e d illing, ese oi s).
In addi ion, beyond he elas ici y o demand, he nega i e ela ionship be ween a i
inc eases and he a e o p o i could also be due o he use o he amoun s collec ed o
inance in es men s in ne wo k mode niza ion, which inc eases he cos o capi al and
educes he a e o p o i .
Re u ning o he ela ionship be ween a i changes and he a e o p o i (equa ion 3), we
no e ha in he sho - e m dynamics equa ion, a i inc eases ha e a posi i e impac on he
