Perceived Water Prices and Estimated Water Demand in the Residential Sector of Windhoek, Namibia. An Analysis of the Different Water Market Segments

We develop a demand model for the water market of Windhoek, Namibia, and segment the market by income. The model uses the perceived price concept developed by Shin (1985). Results confirm the Shin hypotheses that consumers dont know actual prices, but respond to perceived prices. The average price and covariates have the expected signs. However, marginal price (MP) coefficient is positive. Shins perception parameter (k) is negative in two of three income segments. In the Shin model, this implies that consumers respond to MP (through perceived prices). Ambiguities about prices warrant further investigation.