Economic Valuation of Electrical Service Reliability for Households' in Developing Country: A Censored Random Coefficient Model Approach
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AbstractThe paper investigates the households’ preference for electricity service reliability. Using a contingent valuation survey; we elicit Beninese urban households’ willingness to pay (WTP) to avoid power outages. In the study respondents are asked to state their WTP for avoiding six different unplanned outages. We therefore apply a random parameter Tobit model on a temporal panel data since there is cross-sectional heterogeneity and a proportion of zero responses. Based on the estimations, we find that the preference for electricity service reliability among household is higher during night time and weekend days and depends positively on the duration of the outages. These results tend to validate the thesis that households preference for electricity service reliability strongly depends on leisure time. Keywords: Outage, Multivariate censoring; Random coefficients; stated preferences; willingness to pay. JEL Classifications: C15; C24; Q41
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How to Cite
Alinsato, A. S. (2015). Economic Valuation of Electrical Service Reliability for Households’ in Developing Country: A Censored Random Coefficient Model Approach. International Journal of Energy Economics and Policy, 5(1), 352–359. Retrieved from https://econjournals.com/index.php/ijeep/article/view/1050