Customer Preferences for Reliable Power Supply: Using Data on Actual Choices of Back-Up Equipment

Isamu Matsukawa and Yoshifumi Fujii

The Review of Economics and Statistics, 1994, vol. 76, issue 3, 434-46

Abstract: This paper empirically examines customer preferences for the reliable sources of electricity using data obtained from a survey of back-up systems owned by large computer users in Japan. The empirical results based on probabilistic discrete choice models indicate that (1) customers face a trade-off between the price and the reliability of the power supply, and (2) customer characteristics, such as types of business and levels of electricity usage, have significant impacts on the choice of back-up apparatuses. The estimates of cost changes that would offset reliability changes imply that the financial and communications sectors are more concerned about reliability than are other sectors. Copyright 1994 by MIT Press.

Date: 1994
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