IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v17y2024i6p1317-d1354153.html
   My bibliography  Save this article

Choosing to Pay More for Electricity: An Experiment on the Level of Residential Consumer Cooperation

Author

Listed:
  • Noémie Vert Martin

    (Department of Economics, Université de Montréal, Montréal, QC H3C 3J7, Canada
    Theseauthors contributed equally to this work.)

  • Pierre-Olivier Pineau

    (Department of Decision Science, HEC Montréal, Montréal, QC H3T 2A7, Canada
    Theseauthors contributed equally to this work.)

Abstract

Reducing energy consumption and carbon emissions is necessary in the fight against climate change. We are interested in the situation of Quebec (Canada), where low-cost hydropower sold below market value, akin to a consumption subsidy, leads to high residential consumption. We conducted an experiment to test whether individuals would be willing to pay more for electricity. Increasing regulated prices closer to their market value would result in a direct welfare gain and free some green energy, reducing greenhouse gases (GHGs) in other sectors. Giving clear and transparent information on the consequences of the price increase induces a majority of people to choose to pay more. In addition to the economic benefit of the public good, the presence of the environmental benefit increases contributions. Participants with a more-severe budget constraint tend to contribute less. These results are encouraging for the development of efficient energy policies reducing GHG emissions.

Suggested Citation

  • Noémie Vert Martin & Pierre-Olivier Pineau, 2024. "Choosing to Pay More for Electricity: An Experiment on the Level of Residential Consumer Cooperation," Energies, MDPI, vol. 17(6), pages 1-18, March.
    • Handle: RePEc:gam:jeners:v:17:y:2024:i:6:p:1317-:d:1354153
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/17/6/1317/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/17/6/1317/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Arnab Mitra & Michael R. Moore, 2018. "Green Electricity Markets as Mechanisms of Public-Goods Provision: Theory and Experimental Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(1), pages 45-71, September.
    2. Claudia Schwirplies & Andreas Ziegler, 2016. "Offset carbon emissions or pay a price premium for avoiding them? A cross-country analysis of motives for climate protection activities," Applied Economics, Taylor & Francis Journals, vol. 48(9), pages 746-758, February.
    3. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    4. Oerlemans, Leon A.G. & Chan, Kai-Ying & Volschenk, Jako, 2016. "Willingness to pay for green electricity: A review of the contingent valuation literature and its sources of error," Renewable and Sustainable Energy Reviews, Elsevier, vol. 66(C), pages 875-885.
    5. Peter C. Reiss & Matthew W. White, 2008. "What changes energy consumption? Prices and public pressures," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 636-663, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pierre-Olivier Pineau, 2022. "Choosing to Pay More for Electricity: an experiment on the level of residential consumer cooperation," CIRANO Working Papers 2022s-18, CIRANO.
    2. Momsen, Katharina & Ohndorf, Markus, 2020. "When do people exploit moral wiggle room? An experimental analysis of information avoidance in a market setup," Ecological Economics, Elsevier, vol. 169(C).
    3. Herbes, Carsten & Rilling, Benedikt & MacDonald, Scott & Boutin, Nathalie & Bigerna, Simona, 2020. "Are voluntary markets effective in replacing state-led support for the expansion of renewables? – A comparative analysis of voluntary green electricity markets in the UK, Germany, France and Italy," Energy Policy, Elsevier, vol. 141(C).
    4. Kai-Uwe Kuhn & Neslihan Uler, 2019. "Behavioral sources of the demand for carbon offsets: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 22(3), pages 676-704, September.
    5. Cardella, Eric & Ewing, Brad & Williams, Ryan Blake, 2018. "Green is Good – The Impact of Information Nudges on the Adoption of Voluntary Green Power Plans," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266583, Southern Agricultural Economics Association.
    6. Jun Maekawa & Koji Shimada & Ai Takeuchi, 2022. "Sustainability of renewable energy investment motivations during a feed-in-tariff scheme transition: evidence from a laboratory experiment," The Japanese Economic Review, Springer, vol. 73(1), pages 83-101, January.
    7. Klijn, Flip & Pais, Joana & Vorsatz, Marc, 2019. "Static versus dynamic deferred acceptance in school choice: Theory and experiment," Games and Economic Behavior, Elsevier, vol. 113(C), pages 147-163.
    8. Wendelin Schnedler & Nina Lucia Stephan, 2020. "Revisiting a Remedy Against Chains of Unkindness," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(3), pages 347-364, July.
    9. Basteck, Christian & Klaus, Bettina & Kübler, Dorothea, 2021. "How lotteries in school choice help to level the playing field," Games and Economic Behavior, Elsevier, vol. 129(C), pages 198-237.
    10. Ertac, Seda & Gumren, Mert & Gurdal, Mehmet Y., 2020. "Demand for decision autonomy and the desire to avoid responsibility in risky environments: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 77(C).
    11. David J. Cooper & Krista Saral & Marie Claire Villeval, 2021. "Why Join a Team?," Management Science, INFORMS, vol. 67(11), pages 6980-6997, November.
    12. Zakaria Babutsidze & Nobuyuki Hanaki & Adam Zylbersztejn, 2019. "Digital Communication and Swift Trust," Post-Print halshs-02409314, HAL.
    13. Galliera, Arianna, 2018. "Self-selecting random or cumulative pay? A bargaining experiment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 72(C), pages 106-120.
    14. Kamei, Kenju, 2016. "Information Disclosure and Cooperation in a Finitely-repeated Dilemma: Experimental Evidence," MPRA Paper 75100, University Library of Munich, Germany.
    15. Sandra Ludwig & Julia Nafziger, 2011. "Beliefs about overconfidence," Theory and Decision, Springer, vol. 70(4), pages 475-500, April.
    16. Simeon Schudy & Verena Utikal, 2015. "Does imperfect data privacy stop people from collecting personal health data?," TWI Research Paper Series 98, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
    17. Xu, Xue & Potters, Jan, 2018. "An experiment on cooperation in ongoing organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 147(C), pages 28-40.
    18. Prokudina, Elena & Renneboog, Luc & Tobler, Philippe, 2015. "Does Confidence Predict Out-of-Domain Effort?," Discussion Paper 2015-055, Tilburg University, Center for Economic Research.
    19. Patricio S Dalton & Victor H Gonzalez Jimenez & Charles N Noussair, 2017. "Exposure to Poverty and Productivity," PLOS ONE, Public Library of Science, vol. 12(1), pages 1-19, January.
    20. Simon Gaechter & Chris Starmer & Fabio Tufano, 2022. "Measuring “group cohesion” to reveal the power of social relationships in team production," Discussion Papers 2022-12, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:17:y:2024:i:6:p:1317-:d:1354153. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.