Microeconometric Analysis Of Residential Water Demand
AbstractI present a microeconometric model to analyse residential water demand using panel data. Pricing has an increasing-block structure. Database contains individual consumptions from water meters and lacks further information. Permanent income is treated as an unobservable individual effect determining optimal consumption. I also consider a time-varying shock to connect latent and observed demands. The economic setup gives rise to a random effects model with a nonlinear individual effect. I use likelihood-based indirect inference for estimation. I compute price-elasticities and predict the effects of a tariff change. The methodology can be applied to analyse demands of other goods with increasing tariffs.
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Bibliographic InfoPaper provided by CEMFI in its series Working Papers with number wp2008_0803.
Date of creation: Apr 2008
Date of revision:
Household demand; panel data; kinked budget constraint; indirect inference; Random effects; price-elasticity; utilities; increasing-block pricing.;
Find related papers by JEL classification:
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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