Optimal Utility Pricing when Consumers Form Habits : The Case of Piped Water in Vietnam

Optimal Utility Pricing when Consumers Form Habits : The Case of Piped Water in Vietnam

As utility services expand throughout the developing world, providers must grapple with how to set prices to recover average costs. Data from a multi-year randomized pricing experiment among nearly 1500 recently-connected piped water customers in Vietnam reveal month-to-month demand persistence...

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Bibliographic Details
Main Authors: Do, Quy-Toan, Jacoby, Hanan G.
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2020
Subjects:
PIPED WATER
DEMAND ELASTICITY
HABIT FORMATION
UTILITY PRICES
PRICE ELASTICITY
Online Access:https://documents.worldbank.org/en/publication/documents-reports/documentdetail/321751586281645715/optimal-utility-pricing-when-consumers-form-habits-the-case-of-piped-water-in-vietnam
http://hdl.handle.net/10986/33581
id okr-10986-33581
recordtype oai_dc
spelling okr-10986-335812022-09-20T00:12:50Z Optimal Utility Pricing when Consumers Form Habits : The Case of Piped Water in Vietnam Do, Quy-Toan Jacoby, Hanan G. PIPED WATER DEMAND ELASTICITY HABIT FORMATION UTILITY PRICES PRICE ELASTICITY As utility services expand throughout the developing world, providers must grapple with how to set prices to recover average costs. Data from a multi-year randomized pricing experiment among nearly 1500 recently-connected piped water customers in Vietnam reveal month-to-month demand persistence. Based on structural demand estimation, the authors document how endogenous preferences, if unaccounted for, can lead to low take-up and thereby threaten the financial viability of the new water utility. They also show that such demand persistence, while distinct from credit constraints, calls for pricing schemes that similarly defer payment, effectively allowing future consumers to subsidize their present selves. 2020-04-10T18:19:41Z 2020-04-10T18:19:41Z 2020-04 Working Paper https://documents.worldbank.org/en/publication/documents-reports/documentdetail/321751586281645715/optimal-utility-pricing-when-consumers-form-habits-the-case-of-piped-water-in-vietnam http://hdl.handle.net/10986/33581 English Policy Research Working Paper;No. 9207 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper East Asia and Pacific Vietnam
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic PIPED WATER
DEMAND ELASTICITY
HABIT FORMATION
UTILITY PRICES
PRICE ELASTICITY
spellingShingle PIPED WATER
DEMAND ELASTICITY
HABIT FORMATION
UTILITY PRICES
PRICE ELASTICITY
Do, Quy-Toan
Jacoby, Hanan G.
Optimal Utility Pricing when Consumers Form Habits : The Case of Piped Water in Vietnam
geographic_facet East Asia and Pacific
Vietnam
relation Policy Research Working Paper;No. 9207
description As utility services expand throughout the developing world, providers must grapple with how to set prices to recover average costs. Data from a multi-year randomized pricing experiment among nearly 1500 recently-connected piped water customers in Vietnam reveal month-to-month demand persistence. Based on structural demand estimation, the authors document how endogenous preferences, if unaccounted for, can lead to low take-up and thereby threaten the financial viability of the new water utility. They also show that such demand persistence, while distinct from credit constraints, calls for pricing schemes that similarly defer payment, effectively allowing future consumers to subsidize their present selves.
format Working Paper
author Do, Quy-Toan
Jacoby, Hanan G.
author_facet Do, Quy-Toan
Jacoby, Hanan G.
author_sort Do, Quy-Toan
title Optimal Utility Pricing when Consumers Form Habits : The Case of Piped Water in Vietnam
title_short Optimal Utility Pricing when Consumers Form Habits : The Case of Piped Water in Vietnam
title_full Optimal Utility Pricing when Consumers Form Habits : The Case of Piped Water in Vietnam
title_fullStr Optimal Utility Pricing when Consumers Form Habits : The Case of Piped Water in Vietnam
title_full_unstemmed Optimal Utility Pricing when Consumers Form Habits : The Case of Piped Water in Vietnam
title_sort optimal utility pricing when consumers form habits : the case of piped water in vietnam
publisher World Bank, Washington, DC
publishDate 2020
url https://documents.worldbank.org/en/publication/documents-reports/documentdetail/321751586281645715/optimal-utility-pricing-when-consumers-form-habits-the-case-of-piped-water-in-vietnam
http://hdl.handle.net/10986/33581
_version_ 1764479074097430528

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