Regulated price reforms and unregulated substitutes: The case of residential piped gas in Argentina

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Abstract

This paper examines the impact of regulated piped gas price changes on connection decisions and households' welfare. The analysis explicitly considers bottled gas as a substitute for piped gas and therefore uses a simple utility maximization model that yields both a gas-type choice model and a demand specification whose parameterization allows examining households' responses to regulated price changes. The results show that relative gas prices and household features explain households' piped gas usage. They also provide insights on the distribution of welfare changes. The findings illustrate the impact of tariff rebalancing and unregulated substitutes on further access to regulated network services.

Original languageEnglish
Pages (from-to)34-56
Number of pages23
JournalJournal of Regulatory Economics
Volume45
Issue number1
DOIs
StatePublished - Feb 2014
Externally publishedYes

Keywords

  • Consumer behavior
  • Gas industry
  • Tariff rebalancing
  • Utility service diffusion

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