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In 1992, Mayor Gabriel Garcia Romero confronted a situation all too familiar in developing countries-an inadequate and under capitalized water system. Only 28 percent of Cartagena's households had reliable drinking water. Thirty percent were not hooked-up to the system, and the remaining 42 percent had access, but their supply was frequently interrupted. Less than half the population had sewerage services, and there was no wastewater treatment-a problem with serious implications for public health. The water system had not been maintained adequately for more than a decade, and losses were estimated at 52 percent of the total supply. Only a percentage of the customers received bills, and many of these were never collected. Prices remained below cost, so even if the bills were collected, revenues would not have covered expenses. HKS Case Number 1482.0

In 1992, Mayor Gabriel Garcia Romero confronted a situation all too familiar in developing countries-an inadequate and under capitalized water system. Only 28 percent of Cartagena's households had reliable drinking water. Thirty percent were not hooked-up to the system, and the remaining 42 percent had access, but their supply was frequently interrupted. Less than half the population had sewerage services, and there was no wastewater treatment-a problem with serious implications for public health. The water system had not been maintained adequately for more than a decade, and losses were estimated at 52 percent of the total supply. Only a percentage of the customers received bills, and many of these were never collected. Prices remained below cost, so even if the bills were collected, revenues would not have covered expenses. HKS Case Number 1482.1

This case recounts the work of a special Argentina-Uruguay bi-national commission convened to examine the economics of a proposed bridge that would link the two countries. The bridge being considered by commission officials in the spring of 1996 was to extend 41 kilometers across the River Plata estuary, from Buenos Aires to the Uruguay city of Colonias. It would be by far the longest in the world. The case recreates the problem as faced by the commission, which had to consider whether it would make financial sense for a private concessionaire to build and operate the bridge. Specifically, bridge commission staff had to critique the work and recommendations of a private consulting firm whose market projects led it to conclude that tha US$1 billion bridge could successfully be financed by tolls of US$60 per car. HKS Case Number 1400.1

Chaos and disorder in the public housing system of San Juan, Puerto Rico (second largest in the US, prompt the newly-elected governor Pedro Rosello to consider an unprecedented new approach: using the island's national guard troops to patrol the projects. The Guard would replace police who had become so frightened or corrupted by the dominance of drug gangs in public housing that they seldom ventured into the apartment complexes at all. The National Guard, moreover, was a popular force on the island. At the same time, Rosello knew that there were risks associated with calling out the Guard. Many in its ranks were young and inexperienced. Sustaining the commitment over time would be difficult and expensive. The kind of tactics thought necessary to regain control of the projects might offend civil libertarians. The new governor, urged on by the superintendent of police, had to decide whether and how to deploy the Guard. HKS Case Number 1390.0

Chaos and disorder in the public housing system of San Juan, Puerto Rico (second largest in the US, prompt the newly-elected governor Pedro Rosello to consider an unprecedented new approach: using the island's national guard troops to patrol the projects. The Guard would replace police who had become so frightened or corrupted by the dominance of drug gangs in public housing that they seldom ventured into the apartment complexes at all. The National Guard, moreover, was a popular force on the island. At the same time, Rosello knew that there were risks associated with calling out the Guard. Many in its ranks were young and inexperienced. Sustaining the commitment over time would be difficult and expensive. The kind of tactics thought necessary to regain control of the projects might offend civil libertarians. The new governor, urged on by the superintendent of police, had to decide whether and how to deploy the Guard. HKS Case Number 1390.0

This case recounts the work of a special Argentina-Uruguay bi-national commission convened to examine the economics of a proposed bridge that would link the two countries. The bridge being considered by commission officials in the spring of 1996 was to extend 41 kilometers across the River Plata estuary, from Buenos Aires to the Uruguay city of Colonias. It would be by far the longest in the world. The case recreates the problem as faced by the commission, which had to consider whether it would make financial sense for a private concessionaire to build and operate the bridge. Specifically, bridge commission staff had to critique the work and recommendations of a private consulting firm whose market projects led it to conclude that the US$1 billion bridge could successfully be financed by tolls of US$60 per car. HKS Case Number 1400.0

Cambridge Software Corp. must decide whether or not to offer multiple versions of a new software product. The firm has identified five market segments for the software and is deciding which, if any, of three product versions (a high end "industrial" version, a mid-range "commercial" version, and a low-end "student" version) to offer. The decision depends on the size of the different market segments, the customers' willingness-to-pay, and the costs of developing and producing each of the three versions.

Spreadsheet supplement for case 191-072.

Introduces some of the key concepts in linear programming--problem formulation, relevant costs, shadow prices, and reduced costs. The setting, while artificial, is quite typical: a company manufactures two models of trucks in four manufacturing departments; it must determine the "optimal" production mix given information on selling price, production costs, and manufacturing capacity requirements.

In April 1983, the City and County of San Francisco and two irrigation districts in Merced and Stanislaus counties commissioned a feasibility study of their long-standing proposal to dam the Tuolumne River for power and water. At the same time, a coalition of environmentalists, rafters, fishing enthusiasts and California residents known as the Tuolumne River Preservation Trust was lobbying Congress to protect the river from further development under the federal Wild and Scenic Rivers Act. The dam proponents had already produced several favorable cost-benefit studies of their proposal; in June 1983, the Trust asked economists at the Environmental Defense Fund to respond to those studies with an economic assessment of the proposed dam's environmental costs.This case is intended to provoke a discussion of how to place an economic value on environmental benefits that are seemingly intangible. The case calls particular attention to the measurement of user benefits, and the special problem of calculating the value placed by non-users on the sheer existence of an environmental asset ("existence value") and the option to use it someday ("option value"). Also relevant is the problem of discounting over the life of a long-term project. HKS Case Number 701.0.

In April 1983, the City and County of San Francisco and two irrigation districts in Merced and Stanislaus counties commissioned a feasibility study of their long-standing proposal to dam the Tuolumne River for power and water. At the same time, a coalition of environmentalists, rafters, fishing enthusiasts and California residents known as the Tuolumne River Preservation Trust was lobbying Congress to protect the river from further development under the federal Wild and Scenic Rivers Act. The dam proponents had already produced several favorable cost-benefit studies of their proposal; in June 1983, the Trust asked economists at the Environmental Defense Fund to respond to those studies with an economic assessment of the proposed dam's environmental costs.This case is intended to provoke a discussion of how to place an economic value on environmental benefits that are seemingly intangible. The case calls particular attention to the measurement of user benefits, and the special problem of calculating the value placed by non-users on the sheer existence of an environmental asset ("existence value") and the option to use it someday ("option value"). Also relevant is the problem of discounting over the life of a long-term project. HKS Case Number 701.1.

In 1986, Pacific Gas and Electric (PG&E), a private utility company serving most of northern and central California, was facing the loss of many of its biggest and best customers. The threat came not from conservation, general economic depression, or competing utilities; rather, customers were beginning to self-generate, or operate their own, small-scale power plants. PG&E estimated that industrial and commercial customers, responsible for 28 percent of sales, would soon find it cheaper to generate power on-site than to pay PG&E rates. The situation perplexed PG&E's regulators, the California Public Utilities Commission (CPUC), which perceived that industrial and commercial rates could be lowered only at the expense of residential customers or the utility's financial health. Moreover, the region's surplus of generating capacity suggested that new power plants would only make a bad situation worse. Indeed, the CPUC was also struggling with an excess supply of third-party generation, which utilities were required to buy under standard contracts set forth by the CPUC. The case is intended to illustrate issues concerning the regulation of a potential natural monopoly, with an emphasis on the understanding of marginal cost. While the case was designed to highlight the dilemmas of regulators, it can also be taught from the utility's perspective. HKS Case Number 713.0.

In many parts of California, water districts set prices so that agricultural users pay far less than residential users and far less than the true cost of water. While the adoption of a marginal cost pricing system would bring enormous efficiency gains, it would inevitably create losers as well as winners. To anticipate the problems of implementing such a pricing system in California, reformers need to anticipate which regions and which crops in California would be most affected.The case provides the information necessary to do a partial equilibrium incidence analysis, including data on the average factor share of water by crop, the average value created for each crop by marginal applications of water, the degree of interregion variation in the ratio of non-water inputs, and the role of each crop in the California and worldwide market. HKS Case Number 710.0

Freemark Abbey must decide whether to harvest in view of the possibility of rain. Rain could damage the crop but delaying the harvest would be risky. On the other hand, rain could be beneficial and greatly increase the value of the resulting wine. This decision is further complicated by the fact that ripe Riesling grapes can be vinified in two ways, resulting in two different styles of wine. Their relative prices would depend on the uncertain preference of consumers two years later, when the wine is bottled and sold.

Prediction and shipment has been a scheduling and budgetary problem. Multiple regression is suggested as a solution. Evaluation of regression coefficients leads to better understanding of trend, seasonality, and promotion effectiveness.