Panel Data Analysis of Japanese Residential Water Demand Using a Discrete/Continuous Choice Approach

Koji Miyawaki, Yasuhiro Omori () and Akira Hibiki

Global COE Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: Block rate pricing is often applied to income taxation, telecommunication services, and brand marketing in addition to its best-known application in public utility services. Under block rate pricing, consumers face piecewise-linear budget constraints. A discrete/continuous choice approach is usually used to account for piecewise-linear budget constraints for demand and price endogeneity. A recent study proposed a methodology to incorporate a separability condition that previous studies ignore, by implementing a Markov chain Monte Carlo simulation based on a hierarchical Bayesian approach. To extend this approach to panel data, our study proposes a Bayesian hierarchical model incorporating the individual effect. The random coefficients model result shows that the price and income elasticities are estimated to be negative and positive, respectively, and the coefficients of the number of members and the number of rooms per household are estimated to be positive. Furthermore, the AR(1) error component model suggests that the Japanese residential water demand does not have serial correlation.

Keywords: Block rate pricing; Bayesian analysis; Panel data; residential water demand (search for similar items in EconPapers)
JEL-codes: C11 C23 C24 Q25 (search for similar items in EconPapers)
Date: 2010-03
New Economics Papers: this item is included in nep-mkt
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: PANEL DATA ANALYSIS OF JAPANESE RESIDENTIAL WATER DEMAND USING A DISCRETE/CONTINUOUS CHOICE APPROACH (2011)
Working Paper: Panel Data Analysis of Japanese Residential Water Demand Using a Discrete/Continuous Choice Approach (2010)
Working Paper: Panel Data Analysis of Japanese Residential Water Demand Using a Discrete/Continuous Choice Approach (2010)
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