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Short- and long-run time-of-use price elasticities in Swiss residential electricity demand

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  • Massimo, Filippini

Abstract

This paper presents an empirical analysis on the residential demand for electricity by time-of-day. This analysis has been performed using aggregate data at the city level for 22 Swiss cities for the period 2000−2006. For this purpose, we estimated two log-log demand equations for peak and off-peak electricity consumption using static and dynamic partial adjustment approaches. These demand functions were estimated using several econometric approaches for panel data, for example LSDV and RE for static models, and LSDV and corrected LSDV estimators for dynamic models. The attempt of this empirical analysis has been to highlight some of the characteristics of the Swiss residential electricity demand. The estimated short-run own price elasticities are lower than 1, whereas in the long-run these values are higher than 1. The estimated short-run and long-run cross-price elasticities are positive. This result shows that peak and off-peak electricity are substitutes. In this context, time differentiated prices should provide an economic incentive to customers so that they can modify consumption patterns by reducing peak demand and shifting electricity consumption from peak to off-peak periods.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 39 (2011)
Issue (Month): 10 (October)
Pages: 5811-5817

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Handle: RePEc:eee:enepol:v:39:y:2011:i:10:p:5811-5817

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: Residential electricity demand by time-of-use Panel data Partial adjustment model;

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Citations

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Cited by:
  1. Blazquez Leticia & Nina Boogen & Massimo Filippini, 2012. "Residential electricity demand for Spain: new empirical evidence using aggregated data," CEPE Working paper series 12-82, CEPE Center for Energy Policy and Economics, ETH Zurich.
  2. Heshmati, Almas, 2012. "Survey of Models on Demand, Customer Base-Line and Demand Response and Their Relationships in the Power Market," IZA Discussion Papers 6637, Institute for the Study of Labor (IZA).
  3. Desiderio Romero-Jordán & Pablo del Río & Cristina Peñasco, 2014. "Household electricity demand in Spanish regions. Public policy implications," Working Papers 2014/24, Institut d'Economia de Barcelona (IEB).
  4. Massimo Filippini & Anna Alberini, 2010. "Response of Residential Electricity Demand to Price: The Effect of Measurement Error," CEPE Working paper series 10-75, CEPE Center for Energy Policy and Economics, ETH Zurich.
  5. di Cosmo, Valeria & Lyons, Seán & Nolan, Anne, 2014. "Estimating the Impact of Time-of-Use Pricing on Irish Electricity Demand," Papers RB2014/2/2, Economic and Social Research Institute (ESRI).
  6. Lim, Kyoung-Min & Lim, Seul-Ye & Yoo, Seung-Hoon, 2014. "Short- and long-run elasticities of electricity demand in the Korean service sector," Energy Policy, Elsevier, vol. 67(C), pages 517-521.

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