Reference
Clarke, A. J., Colby, B. G., & Thompson, G. D. (2017). Household Water Demand Seasonal Elasticities: A Stone-Geary Model under an Increasing Block Rate Structure. 93, 608-630. https://doi.org/doi: 10.3368/le.93.4.608
Abstract
Using household-level panel data from Tucson, Arizona, and a unique set of highly disaggregated control variables, we estimate residential demand for water via a Stone-Geary specification. The Stone-Geary functional form allows price elasticity of demand to vary with quantity consumed, price, and income and enables estimation of a threshold level of consumption below which demand is considered perfectly price inelastic. An encompassing test of consumer price response reveals evidence favoring a lagged average price specification rather than one using lagged marginal price. The estimated model also finds substantial seasonal variation in price elasticity and declining consumer price responsiveness. (JEL C23, Q25)