The cost of power outages in the business and public sectors in Israel: revealed preference vs. subjective valuation

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.

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