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The Price Elasticity of Demand of Australian Urban Residential Consumers and Water Restrictions

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  • Malcolm Abbott
  • My Tran

Abstract

The aim of this article is to provide derived estimates of the price elasticity of demand for water for residential urban consumers in Australia over the years 2005/06 to 2016/17. The results of the study indicate that higher water and sewerage prices, bundled together, are associated with lower demand for water. The relationship, therefore, between the prices of water and sewerage and demand for water is a negative one. This relationship, however, is a relatively inelastic one, that is a large change in price is required before there is much of a change in demand for water. With the supply of water in most Australian urban centers are controlled by monopoly suppliers this means that there is some scope for water restrictions to negate this market power.

Suggested Citation

  • Malcolm Abbott & My Tran, 2020. "The Price Elasticity of Demand of Australian Urban Residential Consumers and Water Restrictions," International Business Research, Canadian Center of Science and Education, vol. 13(3), pages 153-153, March.
    • Handle: RePEc:ibn:ibrjnl:v:13:y:2020:i:3:p:153
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    References listed on IDEAS

    as
    1. Commission, Productivity, 2011. "Australian’s Urban Water Sector," Inquiry Reports, Productivity Commission, Government of Australia, volume 2, number 55.
    2. Productivity Commission, 2008. "Towards Urban Water Reform: A Discussion Paper," Research Papers 0801, Productivity Commission, Government of Australia.
    3. Greg Barrett, 2004. "Water Conservation: The Role Of Price And Regulation In Residential Water Consumption," Economic Papers, The Economic Society of Australia, vol. 23(3), pages 271-285, September.
    4. Byrnes, Joel, 2013. "A short institutional and regulatory history of the Australian urban water sector," Utilities Policy, Elsevier, vol. 24(C), pages 11-19.
    5. Cooper, Bethany & Crase, Lin, 2016. "Governing water service provision: Lessons from Australia," Utilities Policy, Elsevier, vol. 43(PA), pages 42-47.
    6. Hugh Sibly, 2006. "Urban Water Pricing," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 13(1), pages 17-30.
    7. Terence Dwyer, 2006. "Urban Water Policy: In Need of Economics," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 13(1), pages 3-16.
    8. John Freebairn, 2008. "Some Emerging Issues In Urban Water Supply And Pricing," Economic Papers, The Economic Society of Australia, vol. 27(2), pages 184-193, June.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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