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Do Consumers React to the Shape of Supply? Water Demand under Heterogeneous Price Structures AgEcon
Olmstead, Sheila M.; Hanemann, W. Michael; Stavins, Robert N..
Urban water pricing provides an opportunity to examine whether consumers react to the shape of supply functions. We carry out an empirical analysis of the influence of price and price structure on residential water demand, using the most price-diverse, detailed, household-level water demand data yet available for this purpose. We adapt the Hausman model of labor supply under progressive income taxation to estimate water demand under non-linear prices. Ours is the first analysis to address both the simultaneous determination of marginal price and water demand under block pricing and the possibility of endogenous price structures in the cross section. In order to examine the possibility that consumers facing block prices are more price-responsive, all else...
Tipo: Working or Discussion Paper Palavras-chave: Non-linear pricing; Water demand; Price elasticity; Resource /Energy Economics and Policy; D12; Q21; Q25; Q28; L95.
Ano: 2005 URL: http://purl.umn.edu/10672
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