ID:
publications-4524
Type:
article
Year:
1986
Authors:
Agthe, Donald E. and Agthe, Donald E. and Billings, R. Bruce and Billings, R. Bruce and Dobra, John and Dobra, John L. and Raffiee, Kambiz and Raffiee, Kambiz
Title:
A Simultaneous Equation Demand Model for Block Rates
Venue/Journal:
Water Resources Research
DOI:
10.1029/wr022i001p00001
Research type:
Water System:
Technical Focus:
Abstract:
This paper examines the problem of simultaneous-equations bias in estimation of the water demand function under an increasing block rate structure. The Hausman specification test is used to detect the presence of simultaneous-equations bias arising from correlation of the price measures with the regression error term in the results of a previously published study of water demand in Tucson, Arizona. An alternative simultaneous equation model is proposed for estimating the elasticity of demand in the presence of block rate pricing structures and availability of service charges. This model is used to reestimate the price and rate premium elasticities of demand in Tucson, Arizona for both the usual long-run static model and for a simple short-run demand model. The results from these simultaneous equation models are consistent with a priori expectations and are unbiased.
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