Urban Water Demand Estimates Under Increasing Block Rates Page: 5
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URBAN WATER DEMAND ESTIMATES 5
The Model and Demand Estimating Techniques
The model chosen for this study is a variation of the form of the demand
function suggested by Nordin (1976). It incorporates the rate schedule ex-
plicitly in the demand equation. The difference variable, which accounts
for intramarginal effects, should have a coefficient equal in magnitude and
opposite in sign of the income coefficient. Lawn size, income, house age
and the weather variable are included as additional explanatory variables.
The model is specified as follows. (An implicit time subscript is assumed.)
(1) Qi = Xio + $1c, + Q2Mi + f33D + u,
where
Qj = observed monthly water consumption (gallons) of
the ith household
JI
ci = dji c;,
]=1
Ji
Di = E dji Di
j=
di, = 1 if the ith household consumes in the jth block
= 0 otherwise
Dii = E k -1-(ck_, - cki) - Flat
k=2
= Monthly difference variable
M, = Monthly income
Ji = Number of blocks in the i th household's rate
schedule
q = is the upper endpoint of block j
c,, = the marginal price in block j for the ith household
Flat = Flat rate charge
X, = explanatory variables (constant, lawn size,
weather, house age)
<a , t 33> = vector of parameters to be estimated and,
u-N (0, a2).Copyright 2001 All Rights Reserved
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Nieswiadomy, Michael L. & Molina, David J. Urban Water Demand Estimates Under Increasing Block Rates, article, January 1988; [Hoboken, New Jersey]. (https://digital.library.unt.edu/ark:/67531/metadc71792/m1/5/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT College of Arts and Sciences.