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Residential Water Demand and Price Perception under Increasing Block Rates

Author

Listed:
  • René Cabral

    (EGADE Business School and Banco de México)

  • Luciano Ayala

    (Trinity College Dublin, University of Dublin)

  • Victor Hugo Delgado

    (El Colegio de México)

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.

Suggested Citation

  • René Cabral & Luciano Ayala & Victor Hugo Delgado, 2017. "Residential Water Demand and Price Perception under Increasing Block Rates," Economics Bulletin, AccessEcon, vol. 37(1), pages 508-519.
    • Handle: RePEc:ebl:ecbull:eb-16-00624
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    File URL: http://www.accessecon.com/Pubs/EB/2017/Volume37/EB-17-V37-I1-P46.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Michael O'Donnell & Robert P. Berrens, 2018. "Understanding Falling Municipal Water Demand in a Small City Dependent on the Declining Ogallala Aquifer: Case Study of Clovis, New Mexico," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(04), pages 1-40, October.

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    More about this item

    Keywords

    Water demand; price perception; Mexico; instrumenal variables;
    All these keywords.

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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