Using a Choice Experiment Survey to Estimate Iranian Households' Willingness to Pay to Avoid Power Outages

Document Type : Research Paper

Authors

1 Ph.D of Economics, University of Tehran, Tehran, Iran

2 Professor, Faculty of Economic,s University of Tehran, Tehran, Iran

3 Professor, Faculty of Economics, University of Tehran, Tehran, Iran

4 Professor, Faculty of Economics University of Tehran, Tehran, Iran

Abstract

Using a choice experiment survey, the marginal willingness to pay (WTP) among Iranian households to avoid power outages is estimated. The results indicate that households prefer lower price of alternatives and the low duration and frequency of outages, and the factors of outage day, outage time and warning in advance of outage are important to households' preferences. Moreover, the conditional logit model with interaction effects of SED variables allows us to explain the unobserved heterogeneity of  preferences. The results of this model show that the marginal WTP increases with increasing of household’s expenditure, age of respondent and electricity consumption in the last period. Given that households have negative welfare effects from outages, it is important that policy makers consider these negative impacts on household utility when deciding about reliability of electricity network.

Keywords

Journal of Economic Research (Tahghighat- E- Eghtesadi)
Volume 48, Issue 4 - Serial Number 4
January 2014
Pages 119-143

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History

  • Receive Date: 14 August 2012
  • Revise Date: 25 June 2014
  • Accept Date: 01 October 2013

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