Price knowledge in household demand for utility services

    Authors

    D. W. Carter;J. W. Milon

    Comments

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    Abbreviated Journal Title

    Land Econ.

    Keywords

    RESIDENTIAL WATER DEMAND; BLOCK RATES; BOUNDED RATIONALITY; ELECTRICITY; DEMAND; CHOICE APPROACH; INFORMATION; SELECTIVITY; MODELS; CONSERVATION; METAANALYSIS; Economics; Environmental Studies

    Abstract

    A household's decision to acquire price knowledge is endogenous in the demand for utility services and may affect elasticities and consumption levels. A simultaneous equation model with endogenous switching is developed to evaluate the effects of price knowledge and other sources of heterogeneity. Results indicate informed households were more responsive to average and marginal price signals. Informed households also use less water, but this is due to heterogeneity rather than price knowledge. Controlling for heterogeneity, price knowledge actually increases monthly water usage. The implications of accounting for differences in price knowledge in utility demand modeling and demand management policy are discussed.

    Journal Title

    Land Economics

    Volume

    81

    Issue/Number

    2

    Publication Date

    1-1-2005

    Document Type

    Article

    Language

    English

    First Page

    265

    Last Page

    283

    WOS Identifier

    WOS:000229093400008

    ISSN

    0023-7639

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