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Is all domestic water consumption sensitive to price control?

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  • Roberto Martinez-Espineira
  • Celine Nauges

Abstract

This paper presents a model of residential water demand based on the Stone-Geary utility function, which explicitly considers a threshold of water that is insensitive to price and a quantity that can adapt instantaneously to price changes. First, the threshold is assumed constant, being then allowed to vary according to past levels of consumption, a proxy for households' water-using equipment and habits. A measure of the depreciation rate of habits is derived and the effectiveness of price and non-price conservation measures are compared. The results provide useful policy recommendations for the studied case of Seville (Spain).

Suggested Citation

  • Roberto Martinez-Espineira & Celine Nauges, 2004. "Is all domestic water consumption sensitive to price control?," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1697-1703.
  • Handle: RePEc:taf:applec:v:36:y:2004:i:15:p:1697-1703
    DOI: 10.1080/0003684042000218570
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    References listed on IDEAS

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    1. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, November.
    2. Ruud, Paul A., 2000. "An Introduction to Classical Econometric Theory," OUP Catalogue, Oxford University Press, number 9780195111644, Decembrie.
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