RT Journal Article
SR Electronic
T1 Household Water Demand Seasonal Elasticities: A Stone-Geary Model under an Increasing Block Rate Structure
JF Land Economics
JO Land Econ
FD University of Wisconsin Press
SP 608
OP 630
DO 10.3368/le.93.4.608
VO 93
IS 4
A1 Clarke, Andrew J.
A1 Colby, Bonnie G.
A1 Thompson, Gary D.
YR 2017
UL http://le.uwpress.org/content/93/4/608.abstract
AB Using household-level panel data from Tucson, Arizona, and a unique set of highly disaggregated control variables, we estimate residential demand for water via a Stone-Geary specification. The Stone-Geary functional form allows price elasticity of demand to vary with quantity consumed, price, and income and enables estimation of a threshold level of consumption below which demand is considered perfectly price inelastic. An encompassing test of consumer price response reveals evidence favoring a lagged average price specification rather than one using lagged marginal price. The estimated model also finds substantial seasonal variation in price elasticity and declining consumer price responsiveness. (JEL C23, Q25)