Residential Water Demand and Price Perception under Increasing Block Rates

Rene Cabral (), Luciano Ayala () and Victor Delgado ()
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Luciano Ayala: Trinity College Dublin, University of Dublin
Victor Delgado: El Colegio de México

Economics Bulletin, 2017, vol. 37, issue 1, 508-519

Abstract: We estimate residential water demand for Mexico´s Northern Border state of Nuevo León using data from the National Household Survey. Employing Shin's (1985) price perception model and instrumental variables (IV) techniques to deal with simultaneity problems, our findings indicate that households in the region respond to a ‘perceived' price which is considerably lower than actual water prices. Elasticity estimates for price and income are consistent with theory and previous findings in the literature.

Keywords: Water demand; price perception; Mexico; instrumenal variables (search for similar items in EconPapers)
JEL-codes: C5 H4 (search for similar items in EconPapers)
Date: 2017-03-20
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Citations: View citations in EconPapers (2)

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