• Login
    View Item 
    •   Home
    • UA Graduate and Undergraduate Research
    • UA Theses and Dissertations
    • Dissertations
    • View Item
    •   Home
    • UA Graduate and Undergraduate Research
    • UA Theses and Dissertations
    • Dissertations
    • View Item
    JavaScript is disabled for your browser. Some features of this site may not work without it.

    Browse

    All of UA Campus RepositoryCommunitiesTitleAuthorsIssue DateSubmit DateSubjectsPublisherJournalThis CollectionTitleAuthorsIssue DateSubmit DateSubjectsPublisherJournal

    My Account

    LoginRegister

    About

    AboutUA Faculty PublicationsUA DissertationsUA Master's ThesesUA Honors ThesesUA PressUA YearbooksUA CatalogsUA Libraries

    Statistics

    Most Popular ItemsStatistics by CountryMost Popular Authors

    THE IMPLICATIONS OF DECREASING BLOCK PRICING FOR INDIVIDUAL DEMAND FUNCTIONS: AN EMPIRICAL APPROACH

    • CSV
    • RefMan
    • EndNote
    • BibTex
    • RefWorks
    Thumbnail
    Name:
    azu_td_8017753_sip1_m.pdf
    Size:
    3.169Mb
    Format:
    PDF
    Download
    Author
    Wade, Steven Howard
    Issue Date
    1980
    Keywords
    Prices -- Mathematical models.
    Supply and demand -- Mathematical models.
    Monte Carlo method.
    Advisor
    Taylor, Lester D.
    
    Metadata
    Show full item record
    Publisher
    The University of Arizona.
    Rights
    Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
    Abstract
    Decreasing block pricing refers to the practice of selling a product at successively lower marginal prices as the amount purchased in any one time period increases. In more familiar terms, this practice can be thought of as any quantity discount scheme as long as marginal price does not vary continuously with quantity. Decreasing block pricing results in a faceted, non-convex budget set, and under standard assumptions concerning consumer preferences, yields several nonstandard theoretical implications. The central goal of this paper is to formulate an estimation technique which is consistent with these implications. When the budget set is not convex, the uniqueness of consumer equilibrium is no longer guaranteed. It also follows that discontinuities in demand occur whenever consumer equilibrium shifts from one facet of the budget constraint to another. Prior empirical studies have not made use of demand functions consistent with these results. In Chapter 2, a utility-maximizing algorithm was developed to determine consumer equilibrium given the declining block pricing schedule and income for a Cobb-Douglas utility function. In developing this algorithm, it was made clear that the proper approach for estimating individual demand was through the use of a block-dependent independent variable. The coefficient of this block-department independent variable provided an estimate of a utility function parameter which completely specified the Cobb-Douglas form. Incorporating this utility function estimate into the utility-maximation algorithm made it possible to obtain estimates of consumption given changes in any or all of the rate schedule components. While the use of a block-dependent independent variable is the theoretically correct method for estimating demand, it poses an inescapable problem of errors-in-variables. A Monte Carlo study was performed in Chapter 2 to investigate, among other things, the seriousness of the errors-in-variables bias. The results were quite encouraging. When using data incorporating extremely large error variances, amazingly precise estimates were obtained. Another encouraging Monte Carlo result was when comparing samples not containing a discontinuity with those with one, it was found that the latter produced estimates with statistically significant superiority. Chapter 3 generalized the estimation technique of the previous chapter to allow the estimation of demand using cross-sectional data. The data base recorded monthly electricity consumption for households from a number of cities whose utilities had decreasing block rates. Seven of these cities were selected for analysis. The data also included various demographic characteristics and electric appliance stock information. The generalization was accomplished by assuming that all households had a Stone-Geary utility function. Also, the utility function parameter representing the minimum required quantity of electricity was assumed to depend linearly on the household's appliance stock and demographic characteristics. This allowed demand to vary across households on the basis of this parameter and income. The results of applying this regression technique to the cross-sectional data were then compared with results from a conventional, non-theoretically based demand specification. The data were used in pooled and individual month form with the former yielding much better statistical results. The Stone-Geary form provided a greater number of significant coefficients for price and income variables than the conventional version. The predominant failure of the conventional version was that the coefficient of marginal price was rarely significant and when significant, frequently of the wrong sign. For the same samples, the Stone-Geary results were quite acceptable except for the regressions involving one of the cities. Thus, it was demonstrated that a method consistent with the theoretical implications of decreasing block pricing is easily applied to cross-sectional data and produces better results than conventional techniques.
    Type
    text
    Dissertation-Reproduction (electronic)
    Degree Name
    Ph.D.
    Degree Level
    doctoral
    Degree Program
    Graduate College
    Economics
    Degree Grantor
    University of Arizona
    Collections
    Dissertations

    entitlement

     
    The University of Arizona Libraries | 1510 E. University Blvd. | Tucson, AZ 85721-0055
    Tel 520-621-6442 | repository@u.library.arizona.edu
    DSpace software copyright © 2002-2017  DuraSpace
    Quick Guide | Contact Us | Send Feedback
    Open Repository is a service operated by 
    Atmire NV
     

    Export search results

    The export option will allow you to export the current search results of the entered query to a file. Different formats are available for download. To export the items, click on the button corresponding with the preferred download format.

    By default, clicking on the export buttons will result in a download of the allowed maximum amount of items.

    To select a subset of the search results, click "Selective Export" button and make a selection of the items you want to export. The amount of items that can be exported at once is similarly restricted as the full export.

    After making a selection, click one of the export format buttons. The amount of items that will be exported is indicated in the bubble next to export format.