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The long-run price elasticity of residential demand for electricity: Results from a natural experiment

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  • Feehan, James P.

Abstract

In one of two otherwise similar adjacent regions in a Canadian province, the price of electricity changed abruptly, substantially, and permanently. That natural experiment allows for a simple differences-in-differences calculation of the long-run price elasticity of residential demand for electricity. This analysis is of interest for two reasons. First, it is a rare circumstance when such a methodology can be used. Secondly, the magnitude of the elasticity estimate has substantial implications for utilities, regulators, and policymakers.

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  • Feehan, James P., 2018. "The long-run price elasticity of residential demand for electricity: Results from a natural experiment," Utilities Policy, Elsevier, vol. 51(C), pages 12-17.
    • Handle: RePEc:eee:juipol:v:51:y:2018:i:c:p:12-17
    DOI: 10.1016/j.jup.2018.02.003
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    References listed on IDEAS

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    1. Cabral, Joilson de Assis & Freitas Cabral, Maria Viviana de & Pereira Júnior, Amaro Olímpio, 2020. "Elasticity estimation and forecasting: An analysis of residential electricity demand in Brazil," Utilities Policy, Elsevier, vol. 66(C).
    2. Cao, K.H. & Qi, H.S. & Li, R. & Woo, C.K. & Tishler, A. & Zarnikau, J., 2023. "An experiment in own-price elasticity estimation for non-residential electricity demand in the U.S," Utilities Policy, Elsevier, vol. 81(C).
    3. Yumin Li & Yan Jiang & Shiyuan Li, 2022. "Price and income elasticities of electricity in China: Estimation and policy implications," Regional Science Policy & Practice, Wiley Blackwell, vol. 14(S2), pages 76-90, November.
    4. Mark Sommer & Kurt Kratena, 2020. "Consumption and production-based CO2 pricing policies: macroeconomic trade-offs and carbon leakage," Economic Systems Research, Taylor & Francis Journals, vol. 32(1), pages 29-57, January.
    5. Li, Raymond & Woo, Chi-Keung & Cox, Kevin, 2021. "How price-responsive is residential retail electricity demand in the US?," Energy, Elsevier, vol. 232(C).
    6. Balarama, Hemawathy & Islam, Asad & Kim, Jun Sung & Wang, Liang Choon, 2020. "Price elasticities of residential electricity demand: Estimates from household panel data in Bangladesh," Energy Economics, Elsevier, vol. 92(C).
    7. Ting Lu & Weige Zhang & Yunjia Wang & Hua Xie & Xiaowei Ding, 2022. "Medium- and Long-Term Trading Strategies for Large Electricity Retailers in China’s Electricity Market," Energies, MDPI, vol. 15(9), pages 1-30, May.

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