Seeking theta's desperately: Estimating the distribution of consumers under increasing block rates

Pedro Delicado, Fidel Castro-Rodriguez and Jose Da Rocha

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: This paper shows that the distribution of observed consumption is not a good proxy for the distribution of heterogeneous consumers when the current tariff is an increasing block tariff. We use a two step method to recover the "true" distribution of consumers. First, we estimate the demand function induced by the current tariff. Second, using the demand system, we specify the distribution of consumers as a function of observed consumption to recover the true distribution. Finally, we design a new two-part tariff which allows us to evaluate the equity of the existence of an increasing block tariff.

Keywords: Heterogeneous demand; nonlinear pricing (search for similar items in EconPapers)
JEL-codes: L15 L95 (search for similar items in EconPapers)
Date: 1997-12
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:250

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