Estimating Water Demand under Increasing-Block Tariffs Using Aggregate Data and Proportions of Users per Block |
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Authors: | R Martínez-Espiñeira |
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Institution: | (1) Department of Economics, St. Francis Xavier University, Antigonish, Nova Scotia, Canada, B2G 2W5 |
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Abstract: | The price specification suggested by Nordin (1976) for theanalysis of demand under block tariffs is applied to estimatewater
demand functions using aggregate data from the Northwest ofSpain. The traditional way of using Nordin's specification whenonly
aggregate data are available (using values of marginal priceand difference faced by the average user) is compared with thetheoretically
correct one. The latter uses the average marginalprice and the average difference, these averages being weighted bythe proportion
of users per block. The availability of data on theproportion of users per block permits also the explicit modellingof the
choice of block. The results show that, in the sampleanalyzed, the values of price elasticity under the traditionalspecification
and the more innovative one are not significantlydifferent. |
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Keywords: | water demand water pricing block pricing |
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