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Is all domestic water consumption sensitive to price control?

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  • Roberto Martinez-Espineira
  • Celine Nauges

Abstract

This paper presents a model of residential water demand based on the Stone-Geary utility function, which explicitly considers a threshold of water that is insensitive to price and a quantity that can adapt instantaneously to price changes. First, the threshold is assumed constant, being then allowed to vary according to past levels of consumption, a proxy for households' water-using equipment and habits. A measure of the depreciation rate of habits is derived and the effectiveness of price and non-price conservation measures are compared. The results provide useful policy recommendations for the studied case of Seville (Spain).

Suggested Citation

  • Roberto Martinez-Espineira & Celine Nauges, 2004. "Is all domestic water consumption sensitive to price control?," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1697-1703.
    • Handle: RePEc:taf:applec:v:36:y:2004:i:15:p:1697-1703
    DOI: 10.1080/0003684042000218570
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    References listed on IDEAS

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    1. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, September.
    2. Ruud, Paul A., 2000. "An Introduction to Classical Econometric Theory," OUP Catalogue, Oxford University Press, number 9780195111644.
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