Estimating the Price Elasticity of Residential Water Demand in Tehran

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Sarmadi, Ata | 2023

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 58166 (44)
University: Sharif University of Technology
Department: Management and Economics
Advisor(s): Vesal, Mohammad
Abstract:
While Tehran’s urban water distribution network covers the entire city, not all areas within the city have a sewage collection network. As a result, citizens experience varying water prices. This study intends to estimate the price elasticity of water for household use by analyzing a significant increase in the sewage collection service fee that occurred in October 2015. The unequal access to the sewer network allows us to establish causal identification using the difference in differences method, while also giving us a way to control for the influence of endogeneity caused by block pricing. We estimate the price elasticity of water in Tehran to fall within the range of 0.067 to 0.080
Keywords:
Water Demand ; Price Elasticity ; Difference-in-Difference Method ; Demand Price Elasticity ; Block Pricing ; Urban Water