Elasticities of rate schedule parameters

The rate schedules for services provided by regulated industries are often not defined in terms of simple per-unit charges but as multipart tariffs. For example, in the case of block price rates, the rate parameters are the definition of the block limits and the per-unit charges in each block. The analysis of these rates is complicated by the fact that most econometric models provide only per-unit or marginal-cost-based elasticities. This paper presents a technique for determining the rate schedule elasticities from elasticities for functions of the rate schedule parameters such as per-unit price elasticities. Also presented are methods for determining elasticities for combinations of service characteristics and the price schedule parameter elasticities for an entire service market. Examples are given for block water rates and Hopkinson and time-of-day electricity rates.