The Redistributional Impact of Nonlinear Electricity Pricing
Electricity regulators often mandate increasing-block pricing (IBP)—i.e., marginal price increases with the customer's average daily usage—to protect low-income households from rising costs. IBP has no cost basis, raising a classic conflict between efficiency and distributional goals. Combining household-level utility billing data with census data on income, I find that IBP in California results in modest wealth redistribution, but creates substantial deadweight loss relative to the transfers. I also show that a common approach to studying income distribution effects by using median household income within census block groups may be misleading. (JEL D31, L11, L51, L94, L98, Q41, Q48)
Volume (Year): 4 (2012)
Issue (Month): 3 (August)
|Contact details of provider:|| Web page: https://www.aeaweb.org/aej-policy|
More information through EDIRC
|Order Information:||Web: https://www.aeaweb.org/subscribe.html|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gibson, Michael & Price, Catherine, 1986. "Standing charge rebates Costs and benefits," Energy Policy, Elsevier, vol. 14(3), pages 262-271, June.
- Shin, Jeong-Shik, 1985. "Perception of Price When Price Information Is Costly: Evidence from Residential Electricity Demand," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 591-598, November.
- Penelope J. Brook & Timothy C. Irwin, 2003. "Infrastructure for Poor People : Public Policy for Private Provision," World Bank Publications, The World Bank, number 15159.
- Emmanuel Saez, 1999.
"Do Taxpayers Bunch at Kink Points?,"
NBER Working Papers
7366, National Bureau of Economic Research, Inc.
- Martin S. Feldstein, 1972. "Equity and Efficiency in Public Sector Pricing: The Optimal Two-Part Tariff," The Quarterly Journal of Economics, Oxford University Press, vol. 86(2), pages 175-187.
- Wodon, Quentin & Ajwad, Mohamed Ishan & Siaens, Corinne, 2003. "Lifeline or Means-Testing? Electric Utility Subsidies in Honduras," MPRA Paper 15419, University Library of Munich, Germany.
- Michael Hennessy & Dennis M. Keane, 1989. "Lifeline Rates in California," Evaluation Review, SAGE Publishing, vol. 13(2), pages 123-140, April.
- Snow, Arthur & Warren, Ronald Jr., 1996. "The marginal welfare cost of public funds: Theory and estimates," Journal of Public Economics, Elsevier, vol. 61(2), pages 289-305, August.
- Michael Hennessy, 1984. "The Evaluation of Lifeline Electricity Rates," Evaluation Review, SAGE Publishing, vol. 8(3), pages 327-346, June.
- Koichiro Ito, 2012.
"Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing,"
NBER Working Papers
18533, National Bureau of Economic Research, Inc.
- Koichiro Ito, 2014. "Do Consumers Respond to Marginal or Average Price? Evidence from Nonlinear Electricity Pricing," American Economic Review, American Economic Association, vol. 104(2), pages 537-563, February.
- Lester D. Taylor, 1975. "The Demand for Electricity: A Survey," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 74-110, Spring.
- Herriges, Joseph A & King, Kathleen Kuester, 1994. "Residential Demand for Electricity under Inverted Block Rates: Evidence from a Controlled Experiment," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(4), pages 419-430, October.
- Charles L. Ballard & Don Fullerton, 1992.
"Distortionary Taxes and the Provision of Public Goods,"
Journal of Economic Perspectives,
American Economic Association, vol. 6(3), pages 117-131, Summer.
- Charles L. Ballard & Don Fullerton, 1990. "Distortionary Taxes and the Provision of Public Goods," NBER Working Papers 3506, National Bureau of Economic Research, Inc.
- Brian A. Jacob & Lars Lefgren, 2007. "What Do Parents Value in Education? An Empirical Investigation of Parents' Revealed Preferences for Teachers," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1603-1637.
This item is featured on the following reading lists or Wikipedia pages:
- The Redistributional Impact of Nonlinear Electricity Pricing (AEJ:EP 2012) in ReplicationWiki
When requesting a correction, please mention this item's handle: RePEc:aea:aejpol:v:4:y:2012:i:3:p:56-90. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)or (Michael P. Albert)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.