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Does it matter when a power outage occurs? -- A choice experiment study on the willingness to pay to avoid power outages

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  • Carlsson, Fredrik
  • Martinsson, Peter

Abstract

Using a choice experiment survey, the marginal willingness to pay (WTP) among Swedish households for reductions in power outages is estimated. The results from the random parameter logit estimation indicate that the marginal WTP increases with the duration of the outages, and is higher if the outages occur during weekends and during winter months. Moreover, the random parameter logit model allows us to estimate a sample distribution of WTP and we find a significant unobserved heterogeneity in some of the outage attributes. Given that households have negative welfare effects from outages, it is important that policy makers consider these negative impacts on household utility when regulating the Swedish electricity market.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 30 (2008)
Issue (Month): 3 (May)
Pages: 1232-1245

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Handle: RePEc:eee:eneeco:v:30:y:2008:i:3:p:1232-1245

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  1. Michael J. Doane & Raymand S. Hartman & Chi-Keung Woo, 1988. "Household Preference for Interruptible Rate Options and the Revealed Value of Service Reliability," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 121-134.
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  3. Alpizar, Francisco & Carlsson, Fredrik & Martinsson, Peter, 2001. "Using Choice Experiments for Non-Market Valuation," Working Papers in Economics 52, University of Gothenburg, Department of Economics.
  4. Beenstock, Michael & Goldin, Ephraim & Haitovsky, Yoel, 1998. "Response bias in a conjoint analysis of power outages," Energy Economics, Elsevier, vol. 20(2), pages 135-156, April.
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Cited by:
  1. repec:hhs:slucer:2014_007 is not listed on IDEAS
  2. Vondolia, Godwin K., 2011. "What do respondents bring into contingent valuation? A comparison of monetary and labour payment vehicles," Working Papers in Economics 508, University of Gothenburg, Department of Economics.
  3. Longo, Alberto & Markandya, Anil & Petrucci, Marta, 2008. "The internalization of externalities in the production of electricity: Willingness to pay for the attributes of a policy for renewable energy," Ecological Economics, Elsevier, vol. 67(1), pages 140-152, August.
  4. Kiran Krishnamurthy, Chandra & Kriström, Bengt, 2013. "Determinants of the price-premium for Green Energy: Evidence from an OECD cross-section," CERE Working Papers 2013:7, CERE - the Center for Environmental and Resource Economics, revised 30 Jun 2014.
  5. Wenzel, Lars & Wolf, André, 2014. "Welfare implications of power rationing: An application to Germany," HWWI Research Papers 148, Hamburg Institute of International Economics (HWWI).
  6. Amador, Francisco Javier & González, Rosa Marina & Ramos-Real, Francisco Javier, 2013. "Supplier choice and WTP for electricity attributes in an emerging market: The role of perceived past experience, environmental concern and energy saving behavior," Energy Economics, Elsevier, vol. 40(C), pages 953-966.
  7. Piaszeck, Simon & Wenzel, Lars & Wolf, André, 2013. "Regional diversity in the costs of electricity outages: Results for German counties," HWWI Research Papers 142, Hamburg Institute of International Economics (HWWI).
  8. Akcura, E., 2011. "Information Effects in Valuation of Electricity and Water Service Attributes Using Contingent Valuation," Cambridge Working Papers in Economics 1156, Faculty of Economics, University of Cambridge.
  9. Merz, Carina, 2008. "Monetaere Bewertung der Netzzuverlaessigkeit fuer eine effiziente Qualitaetsanreizregulierung," EWI Working Papers 2008-1, Energiewirtschaftliches Institut an der Universitaet zu Koeln.
  10. Johannes Reichl & Sylvia Frühwirth-Schnatter, 2012. "A censored random coefficients model for the detection of zero willingness to pay," Quantitative Marketing and Economics, Springer, vol. 10(2), pages 259-281, June.
  11. Zografakis, Nikolaos & Sifaki, Elli & Pagalou, Maria & Nikitaki, Georgia & Psarakis, Vasilios & Tsagarakis, Konstantinos P., 2010. "Assessment of public acceptance and willingness to pay for renewable energy sources in Crete," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(3), pages 1088-1095, April.
  12. McNair, Ben J. & Bennett, Jeff & Hensher, David A., 2010. "Households’ Willingness to Pay for Undergrounding Electricity and Telecommunications Wires," MPRA Paper 23164, University Library of Munich, Germany.
  13. Pepermans, Guido, 2011. "The value of continuous power supply for Flemish households," Energy Policy, Elsevier, vol. 39(12), pages 7853-7864.
  14. Hoyos, David & Mariel, Petr & Fernández-Macho, Javier, 2009. "The influence of cultural identity on the WTP to protect natural resources: Some empirical evidence," Ecological Economics, Elsevier, vol. 68(8-9), pages 2372-2381, June.
  15. Vondolia, Godwin Kofi & Eggert, Hakan & Navrud, Stale & Stage, Jesper, 2011. "What Do Respondents Bring to Contingent Valuation? A Comparison of Monetary and Labor Payment Vehicles," Discussion Papers dp-11-13-efd, Resources For the Future.
  16. Abdullah, Sabah & Mariel, Petr, 2010. "Choice experiment study on the willingness to pay to improve electricity services," Energy Policy, Elsevier, vol. 38(8), pages 4570-4581, August.
  17. McNair, Ben J. & Hensher, David A. & Bennett, Jeff, 2010. "Modelling heterogeneity in response behaviour towards a sequence of discrete choice questions: a latent class approach," MPRA Paper 23427, University Library of Munich, Germany.
  18. Myunghwan Kim & Seung-Hoon Yoo, 2012. "The Economic Cost of Unsupplied Diesel Product in Korea Using Input-Output Analysis," Energies, MDPI, Open Access Journal, vol. 5(9), pages 3465-3478, September.
  19. Wang, Zhaohua & Zhang, Bin & Yin, Jianhua & Zhang, Yixiang, 2011. "Determinants and policy implications for household electricity-saving behaviour: Evidence from Beijing, China," Energy Policy, Elsevier, vol. 39(6), pages 3550-3557, June.
  20. Aygul Ozbafli & Glenn Jenkins, 2013. "Estimating Willingness To Pay For Reliable Electricity Supply: A Choice Experiment Study," Development Discussion Papers 2013-01, JDI Executive Programs.
  21. Ladenburg, Jacob & Lutzeyer, Sanja, 2012. "The economics of visual disamenity reductions of offshore wind farms—Review and suggestions from an emerging field," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(9), pages 6793-6802.

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