ALTERNATIVE PRICE SPECIFICATION FOR MUNICIPAL WATER DEMANDS: AN EMPIRICAL TEST

Stephen Frerichs, Nir Becker and K. Easter

No 13033, Economic Reports from University of Minnesota, Department of Applied Economics

Abstract: Based on data from 92 Minnesota cities, the analyses shows that neither marginal price or average price appear as the better predictor of demand. The price elasticity of demand ranges from -. 17 for marginal price in the linear model to -.27 for average price in the log linear model. It appears from the analysis that many consumers are unaware of the marginal price of their water. Thus utilities should simplify their pricing structures and present consumers with an easy to understand costs of water such as the cost of six hours of lawn watering.

Keywords: Demand and Price Analysis; Public Economics (search for similar items in EconPapers)
Pages: 32
Date: 1987
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:umaeer:13033

DOI: 10.22004/ag.econ.13033

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