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.


Issue Date:
1987
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/13033
Total Pages:
32
Series Statement:
Economic Report ER87-8




 Record created 2017-04-01, last modified 2017-08-23

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