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Consumer preferences for fixed versus variable quantities of electricity: joint estimation of contingent quantity and valuation methods

Published online by Cambridge University Press:  22 June 2016

Dale T. Manning  and
John B. Loomis
Dale T. Manning
Affiliation:
Department of Agricultural and Resource Economics, Colorado State University, Clark Building B304, 1172 Campus Delivery, Fort Collins, CO 80523-1172, USA. E-mail: dale.manning@colostate.edu
John B. Loomis
Affiliation:
Department of Agricultural and Resource Economics, Colorado State University, USA. E-mail: john.loomis@colostate.edu
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Abstract

The structure of stated preference questions to value consumption from public infrastructure can vary depending on the conditions of consumption facing the household. Specifically, a good could be offered as a quasi-public or quasi-private good. This paper demonstrates how consumption from two alternative electricity allocation options can be valued using two types of stated preference questions. Since surveyed households were asked two types of questions, the authors develop a joint model of a contingent valuation question and a contingent quantity behavior response that allows for correlation in error terms across models. In their application to two villages in Rwanda, the authors find higher WTP for electricity consumed as a quasi-private good rather than a quasi-public good, with four hours of electricity per day, only in the evening. They also find correlation in the error terms across the two models, suggesting that their joint estimator is more efficient than estimating each model individually.

Type
Research Article
Information
Environment and Development Economics , Volume 21 , Issue 6 , December 2016 , pp. 789 - 811
Copyright
Copyright © Cambridge University Press 2016 

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