Does marginal price matter? A regression discontinuity approach to estimating water demand
AbstractAlthough complex pricing schedules are increasingly common among water and electricity providers, it is difficult to determine whether consumers respond to changes in the pricing schedule because price changes are often confounded with simultaneous demand shocks or non-price policies. To overcome this challenge, we exploit a natural experiment - the introduction of a third price block in an increasing block pricing schedule for water - in Santa Cruz, California. Using a regression discontinuity design, we find that consumers do respond to changes in marginal price. Doubling marginal price leads to a 12% decrease in water use (500 cubic feet per bill) among high-use households.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Environmental Economics and Management.
Volume (Year): 61 (2011)
Issue (Month): 2 (March)
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Web page: http://www.elsevier.com/locate/inca/622870
Water demand Increasing block pricing Regression discontinuity;
Other versions of this item:
- Nataraj, Shanthi & Hanemann, W. Michael, 2008. "Does marginal price matter? : A regression discontinuity approach to estimating water demand," CUDARE Working Paper Series 1077, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
- Nataraj, Shanthi & Hanemann, W. Michael, 2008. "Does Marginal Price Matter? A Regression Discontinuity Approach to Estimating Water Demand," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2jc295gr, Department of Agricultural & Resource Economics, UC Berkeley.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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