Price and Non-Price Influences on Water Conservation: An Econometric Model of Aggregate Demand under Nonlinear Budget Constraint
نویسندگان
چکیده
In this paper, a basic theoretical model of residential water consumption that adequately represents consumer behavior when facing a nonlinear budget constraint is developed. The theoretical model for an individual consumer is adapted to yield an aggregate model that essentially preserves the structure of the demand function for the individual. The model is used to study the influence of prices and nonprice conservation programs on consumption and conservation behavior in three water districts in the San Francisco Bay Area. The empirical results show that pricing can be an effective tool in reducing water consumption but, when the influence of conservation programs is controlled for, the pricing effect is mitigated. Use restrictions and landscaping audits appear to be particularly effective in inducing conservation from consumers. JEL Classification: C43, Q21, Q25 Copyright1998by Leonardo Corral, Anthony C. Fisher, and Nile W. Hatch. All rightsreserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. Price and Non-Price Influences on Water Conservation: An Econometric Model of Aggregate Demand under Nonlinear Budget Constraint
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