A Note on Price Perception in Water Demand Models

Some uncertainty exists among economists concerning the proper specification of demand equations when consumers face block pricing structures. Questions arise about whether consumers react to marginal prices or average prices. Shin (1985) determined that consumers react to average prices when faced...

Full description

Saved in:
Bibliographic Details
Published in:Land economics 1991-08, Vol.67 (3), p.352-359
Main Authors: Nieswiadomy, Michael L., Molina, David J.
Format: Article
Language:English
Subjects:
Average prices
Consumer behavior
Consumer information
Consumer prices
Consumption
Demand models
Economic models
Electricity
Estimating techniques
Fixed charges
Land economics
Management
Perceptions
Prices
Pricing
Pricing policies
Statistical analysis
Sumer
Time series
Water
Water consumption
Water demand
Water districts
Water use
Water utilities
Weather
Citations: Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Some uncertainty exists among economists concerning the proper specification of demand equations when consumers face block pricing structures. Questions arise about whether consumers react to marginal prices or average prices. Shin (1985) determined that consumers react to average prices when faced with a decreasing block structure for electricity. It remains to be determined whether the price perception variable in a water demand function is different under decreasing and increasing rate structures, using Shin's technique. An analysis is conducted to determine whether consumers behave differently under different pricing structures. A microeconomic data set on water consumption is used that contains monthly observations on the same set of individual consumers facing, for the first half of a time series, a decreasing block rate schedule and, for the 2nd half, an increasing block rate schedule.
ISSN:0023-7639
1543-8325
DOI:10.2307/3146430