Heterogeneous responses to price: Evidence from residential water consumers

Public utilities may respond to demand or supply fluctuations by adjusting prices ration quantity. This approach's efficacy and distributional impacts depend on households' heterogeneous price sensitivity, which we estimate in a market for residential water usage. Our household-level panel data features large change marginal novel measure of local hydrological stress. Contrary prior research, find that heavy-usage households are more sensitive than other households, elasticity is largely invariant household wealth. These findings suggest price-based rationing can be an effective tool reduce