Water Demand under Alternative Price Structures
Journal of Environmental Economics and Management, Vol. 54, No. 2, 2007
44 Pages Posted: 28 Oct 2006
There are 2 versions of this paper
Water Demand under Alternative Price Structures
Water Demand Under Alternative Price Structures
Abstract
We estimate the price elasticity of water demand with household-level data, structurally modeling the piecewise-linear budget constraints imposed by increasing-block pricing. We develop a mathematical expression for the unconditional price elasticity of demand under increasing-block prices and compare conditional and unconditional elasticities analytically and empirically. We test the hypothesis that price elasticity may depend on price structure, beyond technical differences in elasticity concepts. Due to the possibility of endogenous utility price structure choice, observed differences in elasticity across price structures may be due either to a behavioral response to price structure, or to underlying heterogeneity among water utility service areas.
Keywords: water demand, price elasticity, non-linear pricing
JEL Classification: Q21, Q25, Q28, L95, D12
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Tax Reform Evaluation Using Nonparametric Methods: Sweden 1980 - 1991
By Soren Blomquist, Matias Eklof, ...
-
Water Demand Under Alternative Price Structures
By Sheila M. Olmstead, W. Michael Hanemann, ...
-
The Value of Scarce Water: Measuring the Inefficiency of Municipal Regulations
By Erin T. Mansur and Sheila M. Olmstead
-
The Value of Scarce Water: Measuring the Inefficiency of Municipal Regulations
By Erin T. Mansur and Sheila M. Olmstead
-
Reduced-Form Vs. Structural Models of Water Demand Under Non-Linear Prices
-
By Quentin Grafton, Tom Kompas, ...
-
Comparing Price and Non-Price Approaches to Urban Water Conservation
-
Comparing Price and Non-Price Approaches to Urban Water Conservation
-
Reconsidering the Economics of Demand Analysis with Kinked Budget Constraints
By Aaron Strong and V. Kerry Smith