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Economic Valuation of Electrical Service Reliability for Households’ in Developing Country: A Censored Random Coefficient Model Approach

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  • Alastaire Sèna ALINSATO

    (Faculty of Economics and Management, University of Abomey-Calavi, Republic of Benin)

Abstract

The paper investigates the households’ preference for electricity service reliability. Using a contingent valuation survey; we elicit Beninese urban households’ willingness to pay (WTP) to avoid power outages. In the study respondents are asked to state their WTP for avoiding six different unplanned outages. We therefore apply a random parameter Tobit model on a temporal panel data since there is cross-sectional heterogeneity and a proportion of zero responses. Based on the estimations, we find that the preference for electricity service reliability among household is higher during night time and weekend days and depends positively on the duration of the outages. These results tend to validate the thesis that households preference for electricity service reliability strongly depends on leisure time

Suggested Citation

  • Alastaire Sèna ALINSATO, 2015. "Economic Valuation of Electrical Service Reliability for Households’ in Developing Country: A Censored Random Coefficient Model Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 5(1), pages 352-359.
  • Handle: RePEc:eco:journ2:2015-01-26
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    References listed on IDEAS

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    More about this item

    Keywords

    Outage; Multivariate censoring; Random coefficients; stated preferences; willingness to pay.;

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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