Water Price Responsiveness of Commercial Establishments¹

Pricing policy in water allocation has become of more concern as some areas find water is indeed a scarce resource. Demand estimates, where the quantity purchased‐value in use relationships are of concern, have been made in other studies for residential, industrial, and agricultural uses in many areas of the country. The price‐quantity relations for water use in commercial firms are estimated and discussed for several different types of stores in this study. A derived demand model is used to estimate commercial demand in the Miami, Florida, area. The price elasticity was generally low (inelastic) for all groups studied except for department stores. This group was found to have an elastic demand for water at all prices above $0.93 per thousand gallons purchased per month, where the mean price for this part of the sample was $1.24. The major implication of the study is that commercial establishments may be responsive to price changes over the long run, much as has already been shown for other types of user groups in other studies.