Alternative Price Specification For Municipal Water Demands: An Empirical Test
Based on data from 92 Minnesota cities, the analyses shows that neither marginal price or average price appear as the better predictor of demand. The price elasticity of demand ranges from -. 17 for marginal price in the linear model to -.27 for average price in the log linear model. It appears from the analysis that many consumers are unaware of the marginal price of their water. Thus utilities should simplify their pricing structures and present consumers with an easy to understand costs of water such as the cost of six hours of lawn watering.
|Date of creation:||1987|
|Date of revision:|
|Contact details of provider:|| Postal: 231ClaOff Building, 1994 Buford Avenue, St. Paul, MN 55108-6040|
Phone: (612) 625-1222
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Web page: http://www.apec.umn.edu
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- James J. Opaluch, 1982. "Urban Residential Demand for Water in the United States: Further Discussion," Land Economics, University of Wisconsin Press, vol. 58(2), pages 225-227.
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- Henry S. Foster, Jr. & Bruce R. Beattie, 1979. "Urban Residential Demand for Water in the United States," Land Economics, University of Wisconsin Press, vol. 55(1), pages 43-58.
- Joseph V. Terza & W. P. Welch, 1982. "Estimating Demand under Block Rates: Electricity and Water," Land Economics, University of Wisconsin Press, vol. 58(2), pages 181-188.
- J. E. Schefter & E. L. David, 1985. "Estimating Residential Water Demand under Multi-Part Tariffs Using Aggregate Data," Land Economics, University of Wisconsin Press, vol. 64(3), pages 272-280.
- R. A. Batchelor, 1975. "Household Technology and the Domestic Demand for Water," Land Economics, University of Wisconsin Press, vol. 51(3), pages 208-223.
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