Review of Economic Studies Vol. 92 No. 3 2025
Optimal Pricing of a New Utility Service: The Case of Piped Water in Vietnam
open access
Abstract
As utility services expand throughout the developing world, providers must grapple with how to set prices to recover average costs. Data from a multiyear randomised pricing experiment among nearly 1,500 recently connected piped water customers in Vietnam reveal month-to-month demand persistence. Based on structural demand estimation, we document how endogenous preferences, if unaccounted for, can lead to low take-up and thereby threaten the financial viability of the new water utility. We also show that such demand persistence calls for pricing schemes that defer lump-sum payment, effectively allowing future consumers to subsidise their present selves.
- DOI
- 10.1093/restud/rdae074
- Volume
- 92
- Issue
- 3
- Pages
- 1773-1800
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref