By Jörg Finsinger (eds.)
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Additional info for Public Sector Economics
The components (Xi) incorporate thejth household's 40 Pricing Issues in the Public Sector pattern of consumption that is due to its appliance and demographic characteristics, its estimated consumption at average weather conditions. and its responses to its rate plan . Because all of the major time-dependent explanatory variables have been incorporated into the estimated weather component, the remaining analysis is conducted using average 24-month consumption values and explanatory variables that are essentially constant for each household j.
When maximized subject to a budget constraint, the utility function would imply restrictions on the specification and coefficients of the individual demand equations. " However, formally derived consumer demand systems are not easily adapted to the demand for intermediate goods and services. In practice such models have required either very strong assumptions on the structure of the underlying utility function or arbitrarily introducing other parameters - such as appliance stocks - into the utility function .
It also has a price component; all (or most all) persons should be able to alford to use it, that is, it should have a low price for access. This concept of fairness seems to have several sources; one is that certain goods and services constitute a kind of social infrastructure, so that an individual without access to them is somehow disenfranchised. It may be thought that every citizen is 'entitled to' a phone, access to a public transport network. a decent education, and so on. The good or service in question (or at least access to it) becomes a social right; exclusion from it is 'unfair', While such notions are usually beyond the purview of economics.
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