IDEAS home Printed from
   My bibliography  Save this article

Willingness to Pay for Improved Quality of Electricity Supply Across Business Type and Location


  • Mark Morrison
  • Craig Nalder


Regulatory authorities in many countries are experimenting with mechanisms for providing electricity distributors with financial incentives to improve quality of supply. In designing these incentives it is apparent that customers preferences have rarely been obtained for consideration in the regulatory process. As a result, there is relatively limited understanding of customers willingness to pay for improved quality of electricity supply. Several studies have examined the willingness of households to pay for improved quality of electricity supply, however, few studies have examined the willingness of businesses to pay for improved quality of supply. In this study we use choice modelling with random parameters logit models to identify the willingness to pay of business for various service related attributes. Furthermore, we examine the values held by both service and manufacturing businesses, from both rural/ regional and urban areas, and observe the differences between them. We find several differences in willingness to pay across business types and locations, however overall the value estimates are relatively homogeneous.

Suggested Citation

  • Mark Morrison & Craig Nalder, 2009. "Willingness to Pay for Improved Quality of Electricity Supply Across Business Type and Location," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 117-134.
  • Handle: RePEc:aen:journl:2009v30-02-a06

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to IAEE members and subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Rolf Golombek & Eystein Gjelsvik & Knut Einar Rosendahl, 1998. "Increased Competition on the Supply Side of the Western European Natural Gas Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-18.
    2. Apostolos Serletis & John Herbert, 2007. "The Message in North American Energy Prices," World Scientific Book Chapters,in: Quantitative And Empirical Analysis Of Energy Markets, chapter 13, pages 156-171 World Scientific Publishing Co. Pte. Ltd..
    3. Siliverstovs, Boriss & L'Hegaret, Guillaume & Neumann, Anne & von Hirschhausen, Christian, 2005. "International market integration for natural gas? A cointegration analysis of prices in Europe, North America and Japan," Energy Economics, Elsevier, vol. 27(4), pages 603-615, July.
    4. Finn Roar Aune & Solveig Glomsrød & Lars Lindholt & Knut Einar Rosendahl, 2005. "Are high oil prices profitable for OPEC in the long run?," Discussion Papers 416, Statistics Norway, Research Department.
    5. Cremer, Helmuth & Gasmi, Farid & Laffont, Jean-Jacques, 2003. "Access to Pipelines in Competitive Gas Markets," Journal of Regulatory Economics, Springer, vol. 24(1), pages 5-33, July.
    6. Gabriel, Steven A. & Zhuang, Jifang & Kiet, Supat, 2005. "A large-scale linear complementarity model of the North American natural gas market," Energy Economics, Elsevier, vol. 27(4), pages 639-665, July.
    7. Maroeska G. Boots, Fieke A.M. Rijkers and Benjamin F. Hobbs, 2004. "Trading in the Downstream European Gas Market: A Successive Oligopoly Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 73-102.
    8. Keizo Mizuno & Tetsuya Shinkai, 2006. "Delegating Infrastructure Projects with Open Access," Journal of Economics, Springer, vol. 88(3), pages 243-261, September.
    9. Robinson, Terry, 2007. "Have European gas prices converged?," Energy Policy, Elsevier, vol. 35(4), pages 2347-2351, April.
    10. Asche, Frank & Osmundsen, Petter & Tveteras, Ragnar, 2002. "European market integration for gas? Volume flexibility and political risk," Energy Economics, Elsevier, vol. 24(3), pages 249-265, May.
    11. Mads Greaker & Eirik Lund Sagen, 2004. "Explaining experience curves for LNG liquefaction costs: Competition matter more than learning," Discussion Papers 393, Statistics Norway, Research Department.
    12. Micola, Augusto Ruperez & Bunn, Derek W., 2007. "Two markets and a weak link," Energy Economics, Elsevier, vol. 29(1), pages 79-93, January.
    13. Eirik Lund Sagen & Marina Tsygankova, 2006. "Russian Natural Gas Exports to Europe: Effects of Russian Gas Market Reforms and the Rising Market Power of Gazprom," Discussion Papers of DIW Berlin 597, DIW Berlin, German Institute for Economic Research.
    14. Dagobert L. Brito & Peter R. Hartley, 2007. "Expectations and the Evolving World Gas Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-24.
    15. Rolf Golombek & Eystein Gjelsvik & Knut Einar Rosendahl, 1995. "Effects of Liberalizing the Natural Gas Markets in Western Europe," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 85-112.
    16. Kleit, Andrew N, 1998. "Did Open Access Integrate Natural Gas Markets? An Arbitrage Cost Approach," Journal of Regulatory Economics, Springer, vol. 14(1), pages 19-33, July.
    17. Gang Liu, 2004. "Estimating Energy Demand Elasticities for OECD Countries. A Dynamic Panel Data Approach," Discussion Papers 373, Statistics Norway, Research Department.
    18. Marmer, Vadim & Shapiro, Dmitry & MacAvoy, Paul, 2007. "Bottlenecks in regional markets for natural gas transmission services," Energy Economics, Elsevier, vol. 29(1), pages 37-45, January.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. repec:eee:enepol:v:109:y:2017:i:c:p:659-665 is not listed on IDEAS
    2. Huh, Sung-Yoon & Woo, JongRoul & Lim, Sesil & Lee, Yong-Gil & Kim, Chang Seob, 2015. "What do customers want from improved residential electricity services? Evidence from a choice experiment," Energy Policy, Elsevier, vol. 85(C), pages 410-420.
    3. Sagebiel, Julian, 2017. "Preference heterogeneity in energy discrete choice experiments: A review on methods for model selection," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 804-811.
    4. Raul Alberto Jimenez Mori, 2017. "Are Blackout Days Free of Charge?: Valuation of Individual Preferences for Improved Electricity Services," IDB Publications (Working Papers) 8424, Inter-American Development Bank.
    5. Ozbafli, Aygul & Jenkins, Glenn P., 2016. "Estimating the willingness to pay for reliable electricity supply: A choice experiment study," Energy Economics, Elsevier, vol. 56(C), pages 443-452.
    6. Darla Hatton MacDonald & Mark Morrison & Mary Barnes, 2010. "Willingness to Pay and Willingness to Accept Compensation for Changes in Urban Water Customer Service Standards," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 24(12), pages 3145-3158, September.
    7. Aygul Ozbafli & Glenn Jenkins, 2013. "Estimating Willingness To Pay For Reliable Electricity Supply: A Choice Experiment Study," Development Discussion Papers 2013-01, JDI Executive Programs.
    8. Amador, Francisco Javier & González, Rosa Marina & Ramos-Real, Francisco Javier, 2013. "Supplier choice and WTP for electricity attributes in an emerging market: The role of perceived past experience, environmental concern and energy saving behavior," Energy Economics, Elsevier, vol. 40(C), pages 953-966.

    More about this item

    JEL classification:

    • F0 - International Economics - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aen:journl:2009v30-02-a06. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Williams). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.