Bayesian Estimation of Demand Functions under Block Rate Pricing
AbstractThis article proposes a Bayesian estimation method of demand functions under block rate pricing, focusing on increasing one. Under this pricing structure, price changes when consumption exceeds a certain threshold and the consumer faces a utility maximization problem subject to a piecewise-linear budget constraint. We apply the so-called discrete/continuous choice approach to derive the corresponding demand function. Taking a hierarchical Bayesian approach, we implement a Markov chain Monte Carlo simulation to estimate the demand function. Moreover, a separability condition is explicitly considered to obtain proper estimates. We find, however, that the convergence of the distribution of simulated samples to the posterior distribution is slow, requiring an additional scale transformation step for parameters to the Gibbs sampler. The model is also extended to allow random coefficients for panel data and spatial correlation for spatial data. These proposed methods are applied to estimate the Japanese residential water and electricity demand function.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-568.
Length: 46 pages
Date of creation: Jun 2008
Date of revision:
Contact details of provider:
Postal: Hongo 7-3-1, Bunkyo-ku, Tokyo 113-0033
Web page: http://www.cirje.e.u-tokyo.ac.jp/index.html
More information through EDIRC
Other versions of this item:
- Koji Miyawaki & Yasuhiro Omori & Akira Hibiki, 2006. "Bayesian Estimation of Demand Functions under Block Rate Pricing," CIRJE F-Series CIRJE-F-424, CIRJE, Faculty of Economics, University of Tokyo.
- Koji Miyawaki & Yasuhiro Omori & Akira Hibiki, 2009. "Bayesian Estimation of Demand Functions under Block Rate Pricing," CIRJE F-Series CIRJE-F-631, CIRJE, Faculty of Economics, University of Tokyo.
- Koji, Miyawaki & Yasuhiro Omori & Akira Hibiki, 2010. "Bayesian Estimation of Demand Functions under Block-Rate Pricing," CIRJE F-Series CIRJE-F-712, CIRJE, Faculty of Economics, University of Tokyo.
- NEP-ALL-2008-06-21 (All new papers)
- NEP-ECM-2008-06-21 (Econometrics)
- NEP-ENE-2008-06-21 (Energy Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Henrique Monteiro, 2010. "Residential Water Demand in Portugal: checking for efficiency-based justifications for increasing block tariffs," Working Papers Series 1 ercwp0110, ISCTE-IUL, Business Research Unit (BRU-IUL).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CIRJE administrative office).
If references are entirely missing, you can add them using this form.