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Customer Preferences for Reliable Power Supply: Using Data on Actual Choices of Back-Up Equipment

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  • Matsukawa, Isamu
  • Fujii, Yoshifumi

Abstract

This paper empirically examines customer preferences for the reliable sources of electricity using data obtained from a survey of back-up systems owned by large computer users in Japan. The empirical results based on probabilistic discrete choice models indicate that (1) customers face a trade-off between the price and the reliability of the power supply, and (2) customer characteristics, such as types of business and levels of electricity usage, have significant impacts on the choice of back-up apparatuses. The estimates of cost changes that would offset reliability changes imply that the financial and communications sectors are more concerned about reliability than are other sectors. Copyright 1994 by MIT Press.

Suggested Citation

  • Matsukawa, Isamu & Fujii, Yoshifumi, 1994. "Customer Preferences for Reliable Power Supply: Using Data on Actual Choices of Back-Up Equipment," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 434-446, August.
    • Handle: RePEc:tpr:restat:v:76:y:1994:i:3:p:434-46
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    Cited by:

    1. Alastaire S na ALINSATO, 2015. "Economic Valuation of Electrical Service Reliability for Households in Developing Country: A Censored Random Coefficient Model Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 5(1), pages 352-359.
    2. Edwin Teye Sosi & Philip Akrofi Atitianti, 2021. "How constraining are electricity fluctuations to Ghanaian firms’ performance?," SN Business & Economics, Springer, vol. 1(11), pages 1-23, November.
    3. Marcos Perroni & Luciano Luiz Dalazen & Wesley Vieira da Silva & Sergio Eduardo Gouv a da Costa & Claudimar Pereira da Veiga, 2015. "Evolution of Risks for Energy Companies from the Energy Efficiency Perspective: The Brazilian Case," International Journal of Energy Economics and Policy, Econjournals, vol. 5(2), pages 612-623.
    4. Majid Hashemi & Glenn P. Jenkins & Roop Jyoti & Aygul Ozbafli, 2018. "Evaluating the Cost to Industry of Electricity Outages," Development Discussion Papers 2018-14, JDI Executive Programs.
    5. Kunaifi & Angèle Reinders, 2018. "Perceived and Reported Reliability of the Electricity Supply at Three Urban Locations in Indonesia," Energies, MDPI, vol. 11(1), pages 1-27, January.
    6. George, Donald A R, 2012. "Technical progress and product reliability under competition and monopoly," SIRE Discussion Papers 2012-23, Scottish Institute for Research in Economics (SIRE).
    7. Baarsma, Barbara E. & Hop, J. Peter, 2009. "Pricing power outages in the Netherlands," Energy, Elsevier, vol. 34(9), pages 1378-1386.
    8. Taro Ohdoko & Satoru Komatsu & Shinji Kaneko, 2013. "Residential preferences for stable electricity supply and a reduction in air pollution risk: a benefit transfer study using choice modeling in China," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(3), pages 309-328, July.
    9. Donald A. R. George, 2006. "A Simple Model of Reliability, Warranties, and Price-Capping," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 5(1), pages 1-16, April.
    10. Lassana Cissokho, 2015. "Power Outages and the Productivity of Small and Medium Enterprises: the role of Formality," EcoMod2015 8239, EcoMod.
    11. Sun, Tianqing & Wang, Xiaohua & Ma, Xianguo, 2009. "Relationship between the economic cost and the reliability of the electric power supply system in city: A case in Shanghai of China," Applied Energy, Elsevier, vol. 86(10), pages 2262-2267, October.
    12. Donald A R George, 2014. "Segmentation in Consumer Durables Markets," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 5(2), pages 13-22, March.
    13. Jonathan Eyer & Adam Rose, 2019. "Mitigation and Resilience Tradeoffs for Electricity Outages," Economics of Disasters and Climate Change, Springer, vol. 3(1), pages 61-77, April.
    14. Woo, C.K. & Cao, K.H. & Zarnikau, J. & Yip, T.L. & Chow, A., 2021. "What moves Hong Kong's train ridership?," Research in Transportation Economics, Elsevier, vol. 90(C).
    15. Musiliu O. Oseni, 2017. "Self-Generation and Households' Willingness to Pay for Reliable Electricity Service in Nigeria," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    16. Donald A. R. George, 2011. "Technical progress and product reliability under competition and monopoly," Edinburgh School of Economics Discussion Paper Series 211, Edinburgh School of Economics, University of Edinburgh.
    17. Woo, C.K. & Tishler, A. & Zarnikau, J. & Chen, Y., 2021. "Average residential outage cost estimates for the lower 48 states in the US," Energy Economics, Elsevier, vol. 98(C).
    18. Matsukawa, Isamu & Ito, Nariyasu, 1998. "Household ownership of electric room air conditioners," Energy Economics, Elsevier, vol. 20(4), pages 375-387, September.

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