Estimation of Residential Water Demand with Imperfect Price Perception
Using data from a household survey carried out in the French overseas territory of Réunion, we investigate the price of drinking-water perceived by households faced with an increasing, multi-step pricing scheme. To this purpose we use an improved version of the method introduced by Shin (1985) to estimate the demand for residential water when consumers are imperfectly informed about their pricing schedule. The empirical results suggest that Réunion households underestimate the price of water and thus consume more than what is economically rational. Providing information to households about the marginal price of water may be an innovative means of inducing them to respond to pricing policies designed to promote water conservation.
|Date of creation:||Dec 2014|
|Publication status:||Published in Environmental and Resource Economics, Springer, 2014, 59 (4), pp.561-581. <10.1007/s10640-013-9750-z>|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00918147|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
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.:
- Henry S. Foster, Jr. & Bruce R. Beattie, 1981. "On the Specification of Price in Studies of Consumer Demand under Block Price Scheduling," Land Economics, University of Wisconsin Press, vol. 57(4), pages 624-629.
- Jerry A. Hausman & David A. Wise, 1976. "The Evaluation of Results from Truncated Samples: The New Jersey Income Maintenance Experiment," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 421-445 National Bureau of Economic Research, Inc.
- Jasper M. Dalhuisen & Raymond J. G. M. Florax & JHenri L. F. de Groot & Peter Nijkamp, 2003. "Price and Income Elasticities of Residential Water Demand: A Meta-Analysis," Land Economics, University of Wisconsin Press, vol. 79(2), pages 292-308.
- Davidson, Russell & MacKinnon, James G, 1984.
"Model Specification Tests Based on Artificial Linear Regressions,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(2), pages 485-502, June.
- Russell Davidson & James G. MacKinnon, 1980. "Model Specification Tests Based on Artificial Linear Regressions," Working Papers 390, Queen's University, Department of Economics.
- Russell Davidson & James G. MacKinnon, 1981. "Model Specification Tests Based on Artificial Linear Regressions," Working Papers 426, Queen's University, Department of Economics.
- S. Gaudin, 2006. "Effect of price information on residential water demand," Applied Economics, Taylor & Francis Journals, vol. 38(4), pages 383-393.
- Schleich, Joachim & Hillenbrand, Thomas, 2009. "Determinants of residential water demand in Germany," Ecological Economics, Elsevier, vol. 68(6), pages 1756-1769, April.
- Schleich, Joachim & Hillenbrand, Thomas, 2007. "Determinants of residential water demand in Germany," Working Papers "Sustainability and Innovation" S3/2007, Fraunhofer Institute for Systems and Innovation Research (ISI).
- Maria García-valiñas, 2005. "Efficiency and Equity in Natural Resources Pricing: A Proposal for Urban Water Distribution Service," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(2), pages 183-204, October.
- Andrew C. Worthington & Mark Hoffman, 2008. "An Empirical Survey Of Residential Water Demand Modelling," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 842-871, December.
- Arbues, Fernando & Garcia-Valinas, Maria Angeles & Martinez-Espineira, Roberto, 2003. "Estimation of residential water demand: a state-of-the-art review," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(1), pages 81-102, March.
- Kavezeri-Karuaihe, Selma T. & Wandschneider, Philip R. & Yoder, Jonathan K., 2005. "Perceived Water Prices and Estimated Water Demand in the Residential Sector of Windhoek, Namibia. An Analysis of the Different Water Market Segments," 2005 Annual Meeting, July 6-8, 2005, San Francisco, California 36289, Western Agricultural Economics Association.
- Carlevaro, Fabrizio & Schlesser, C. & Binet , M. E. & Paul, M., 2007. "Econometric Modeling and Analysis of Residential Water Demand Based on Unbalanced Panel Data," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 8(4), pages 81-102.
- Carlevaro, Fabrizio & Schlesser, C. & Binet, M. E. & Durand, S. & Paul, M., 2007. "Econometric Modeling and Analysis of Residential Water Demand Based on Unbalanced Panel Data," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 8(4), pages 103-124.
- Marie-Estelle Binet & Fabrizio Carlevaro & Stéphanie Durand & Michel Paul & Caroline Schlesser, 2007. "Econometric modeling and analysis of residential water demand based on unbalanced panel data," Post-Print halshs-00145013, HAL.
- R. G. Taylor & John R. McKean & Robert A. Young, 2004. "Alternate Price Specifications for Estimating Residential Water Demand with Fixed Fees," Land Economics, University of Wisconsin Press, vol. 80(3), pages 463-475.
- Michael L. Nieswiadomy & David J. Molina, 1991. "A Note on Price Perception in Water Demand Models," Land Economics, University of Wisconsin Press, vol. 67(3), pages 352-359.
- Arjan Ruijs, 2009. "Welfare and Distribution Effects of Water Pricing Policies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(2), pages 161-182, June.
- Ruijs, A. & Zimmermann, A. & van den Berg, M., 2008. "Demand and distributional effects of water pricing policies," Ecological Economics, Elsevier, vol. 66(2-3), pages 506-516, June.
- Shin, Jeong-Shik, 1985. "Perception of Price When Price Information Is Costly: Evidence from Residential Electricity Demand," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 591-598, November.
- 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.
- John A. Nordin, 1976. "A Proposed Modification of Taylor's Demand Analysis: Comment," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 719-721, Autumn. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00918147. 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: (CCSD)
If references are entirely missing, you can add them using this form.