TY  - JOUR
AU  - Olmstead,Sheila
AU  - Hanemann,W. Michael
AU  - Stavins,Robert N.
TI  - Water Demand Under Alternative Price Structures
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13573
PY  - 2007
Y2  - November 2007
UR  - http://www.nber.org/papers/w13573
L1  - http://www.nber.org/papers/w13573.pdf
N1  - Author contact info:
Sheila Olmstead
Resources for the Future
1616 P Street, NW
Washington, DC  20036
Tel: 202-328-5163
E-Mail: olmstead@rff.org

Michael Hanemann
University of California
Depart. of Agricultural & Resource Economics
207 Giannini Hall
Berkeley, CA  94720
E-Mail: hanemann@are.berkeley.edu

Robert Stavins
JFK School of Government
Harvard University
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-1820
Fax: 617/496-3783
E-Mail: robert_stavins@harvard.edu
AB  - We estimate the price elasticity of water demand with household-level data, structurally modeling the piecewise-linear budget constraints imposed by increasing-block pricing.  We develop a mathematical expression for the unconditional price elasticity of demand under increasing-block prices and compare conditional and unconditional elasticities analytically and empirically.  We test the hypothesis that price elasticity may depend on price structure, beyond technical differences in elasticity concepts.  Due to the possibility of endogenous utility price structure choice, observed differences in elasticity across price structures may be due either to a behavioral response to price structure, or to underlying heterogeneity among water utility service areas.
ER  -