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- Title
Price Knowledge in Household Demand for Utility Services.
- Authors
Carter, David W.; Milon, J. Walter
- 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.
- Subjects
HOUSEHOLDS; PRICES; ELASTICITY (Economics); CONSUMPTION (Economics); ECONOMIC demand
- Publication
Land Economics, 2005, Vol 81, Issue 2, p265
- ISSN
0023-7639
- Publication type
Article
- DOI
10.3368/le.81.2.265