Current Issues in the Economics of Water Resource Management: Theory, Applications and Policies (2002) (Economy & Environment #23)

By: and and

Sign Up Now! Already a Member? Log In
You must be logged into UK education collection to access this title. Learn about membership options, or view our freely available titles.

Synopsis
The marginal price elasticities estimated by Martinez-Espineira conforms to expectation. The price specification that accounts for the changing proportion of water users in each block yields a higher elasticity (-0. 47) compared to the spec­ ification ignoring this feature of the data. However, this difference is not found to be statistically significant, a result attributed to the low power of the test (small sample size limiting the accuracy of estimates). In conclusion, the paper provides a theoretically correct price specification for demand functions under block pricing and aggregate data. The empirical findings in the paper, however, are not conclusive and further empirical work using more data and alternative (nonlinear) demand functions, is needed to show the practical implications of the arguments put forward by the Martinez-Espineira's paper. Static empirical consumer demand functions estimated with aggregate data are well known to suffer form serial correlation and other statistical problems asso­ ciated with misspecified dynamics. These dynamics arise because consumers do not react immediately to a change in prices due to their largely predetermined lifestyle. In the case of demand for water, for example, current purchases can be largely predetermined due to commitments arising from past purchases such as swimming pools, bathtubs, dishwashing machines, etc. Muellbauer and Pashardes (1992) show that the autoregressive nature of consumer demand data can be cap­ tured in a theoretically consistent manner by incorporating intertemporal aspects of consumer behaviour in the model through habit formation and durability.
Copyright:
2002

Book Details

Book Quality:
Publisher Quality
ISBN-13:
9789401599849
Related ISBNs:
9781402005428
Publisher:
Springer Netherlands
Date of Addition:
Copyrighted By:
N/A
Adult content:
No
Language:
English
Has Image Descriptions:
No
Categories:
Nonfiction, Outdoors and Nature, Business and Finance, Earth Sciences, Law, Legal Issues and Ethics
Submitted By:
Bookshare Staff
Usage Restrictions:
This is a copyrighted book.
Edited by:
P. Pashardes
Edited by:
T.M. Swanson
Edited by:
A. Xepapadeas

Reviews

No Rating Yet