Block Rate Pricing of Water in Indonesia: An Analysis of Welfare Effects
Block rate pricing of piped water in Indonesian cities has a progressive structure: the marginal price paid increases with the volume of demand. This paper estimates household water demand in Salatiga city using the Burtless and Hausman model, and finds that its distribution is not unimodal—that data cluster around kinks. The main estimation results are a price elasticity of approximately-1.2 and an income elasticity of 0.05. These elasticities are mutually dependent. The estimated model is used to investigate the social welfare consequences of a shift to uniform pricing. The principal beneficiaries would be large households, which are not necessarily wealthy. While replacing the complex rate structure by a uniform marginal price would have positive effects on average welfare, the equity consequences would be small. To improve equity, water companies could reduce installation fees, giving low-income households access to water connections, or reinvest profits in network expansion to unserviced areas.
Volume (Year): 36 (2000)
Issue (Month): 3 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/CBIE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/CBIE20|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Burtless, Gary & Hausman, Jerry A, 1978.
"The Effect of Taxation on Labor Supply: Evaluating the Gary Negative Income Tax Experiments,"
Journal of Political Economy,
University of Chicago Press, vol. 86(6), pages 1103-1130, December.
- G. Burtless & J. A. Hausman, 1977. "The Effect of Taxation on Labor Supply: Evaluating the Gary Negative Income Tax Experiment," Working papers 211, Massachusetts Institute of Technology (MIT), Department of Economics.
- Moffitt, Robert, 1990. "The Econometrics of Kinked Budget Constraints," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 119-139, Spring. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:taf:bindes:v:36:y:2000:i:3:p:73-92. 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: (Michael McNulty)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.