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The Cost of Power Outages in the Business and Public Sectors in Israel: Revealed Preference vs. Subjective Valuation

Michael Beenstock, Ephraim Goldin, and Yoel Haitovsky

Year: 1997
Volume: Volume18
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol18-No2-3
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Abstract:
Cross-section data on investment in back-up generators and uninterruptable power supplies (UPS) are used to infer the implied cost of electricity outages in the business and public sectors in Israel. Two-limit tobit models of the demand for back-up are estimated and used to simulate the mitigated and unmitigated cost of power outages. These "revealed preference estimates of outage costs are then compared with estimates based on the method of subjective evaluation.



Willingness to Pay among Swedish Households to Avoid Power Outages: A Random Parameter Tobit Model Approach

Fredrik Carlsson and Peter Martinsson

Year: 2007
Volume: Volume 28
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No1-4
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Abstract:
Using a contingent valuation survey, we elicit Swedish households� willingness to pay (WTP) to avoid power outages. In the study respondents are asked to state their WTP for avoiding nine different types of outages. We therefore apply a random parameter Tobit model since there is cross-sectional heterogeneity and a proportion of zero responses. Based on the estimations, we find that the WTP depends positively on the duration of the outages, and that WTP is significantly higher for unplanned outages. The overall variation in the WTP due to observed heterogeneity in housing and socio-economic variables is small compared to the pure effects of power outages. Policy implications of those findings are discussed.





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