ID:
publications-4511
Type:
article
Year:
1985
Authors:
Shin, Jeong-Shik and Shin, Jeong-Shik
Title:
Perception of Price When Price Information Is Costly: Evidence from Residential Electricity Demand
Venue/Journal:
The Review of Economics and Statistics
DOI:
10.2307/1924803
Research type:
Water System:
Technical Focus:
Abstract:
A bstract-Residential electricity consumption is an example of a good for which it is costly to determine marginal price, since price changes with the quantity purchased according to multistep block rate schedules. This paper investigates the effect of the price information problem on consumers' price perceptions. An alternative hypothesis of average price perception is tested against the marginal price postulate which assumes wellinformed consumers. The model, which includes a price perception variable, allows the estimation of the price to which consumers actually respond. The empirical results support the hypothesis that consumers respond to average price perceived from the electricity bill.
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