Iranian Journal of Economic Research

Estimating the Residential Water Demand Function

Document Type : Research Paper

Authors

Jamshid Pazhoyan 1
Hosseini Seyyed Shams-Aldin 2

1 Professor, Faculty of Economics, Allameh Tabatabaie University

2 Ph.D. Student of Economics, Islamic Azad University

Abstract
 



The present paper applied Cointegration Vector Autoregressive (CVAR) Technique to Stone-Geary’s linear expenditure system، in order to estimate the residential demand for water in Metropolitan Tehran.
Data used are for 1982-2000 period. Price-elasticity of the demand function is estimated as 8% for the point elasticity، and 12% for the average of duration. The income elastisities are estimated as 13% and 20%، respectively.
This shows that the price elasticity of demand for water is inelastic. It is also indicated that the minimum use of water by Tehrani Citizens is 92 liters per-person per-day which is in the range of standard water use.

Keywords

Cointegration Vector Autoregressive
Stone
Geary Utility Function
Residential Water Demand Function

  • Receive Date 15 May 2016
  • First Publish Date 15 May 2016

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