IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-10-00207.html
   My bibliography  Save this article

Penalizing Consumers for Saving Electricity

Author

Listed:
  • Evens Salies

    () (Observatoire Fran├žais des Conjonctures Economiques, Sciences Po)

Abstract

In response to climate change, many electric utilities introduce pricing schemes to induce their customers to consume less electricity. When a significant portion of the consumer population finds it more costly to economize electricity, one would expect utilities to offer incentives in return for lower usage of electricity. The model put forward in this paper enhances understanding of why a typical electric utility may instead prefer to increase prices, in so doing discriminating against environmentally conscious customers. This result holds even when the utility is charged for its greenhouse gas emissions. But in this case the price increase is sufficiently small to induce energy savings also from customers for whom there is a net cost in doing so.

Suggested Citation

  • Evens Salies, 2010. "Penalizing Consumers for Saving Electricity," Economics Bulletin, AccessEcon, vol. 30(2), pages 1144-1153.
  • Handle: RePEc:ebl:ecbull:eb-10-00207
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I2-P108.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Yamamoto, Yoshihiro & Suzuki, Akihiko & Fuwa, Yasuhiro & Sato, Tomohiro, 2008. "Decision-making in electrical appliance use in the home," Energy Policy, Elsevier, vol. 36(5), pages 1679-1686, May.
    2. Choe, Chongwoo & Fraser, Iain, 1999. "An Economic Analysis of Household Waste Management," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 234-246, September.
    3. Paul Klemperer, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, Oxford University Press, vol. 102(2), pages 375-394.
    4. Yongmin Chen, 1997. "Paying Customers to Switch," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(4), pages 877-897, December.
    5. Train, Kenneth E, 1994. "Self-Selecting Tariffs under Pure Preferences among Tariffs," Journal of Regulatory Economics, Springer, vol. 6(3), pages 247-264, September.
    6. Akerlof, George A & Dickens, William T, 1982. "The Economic Consequences of Cognitive Dissonance," American Economic Review, American Economic Association, vol. 72(3), pages 307-319, June.
    7. Banfi, Silvia & Farsi, Mehdi & Filippini, Massimo & Jakob, Martin, 2008. "Willingness to pay for energy-saving measures in residential buildings," Energy Economics, Elsevier, vol. 30(2), pages 503-516, March.
    8. Steg, Linda, 2008. "Promoting household energy conservation," Energy Policy, Elsevier, vol. 36(12), pages 4449-4453, December.
    9. Wall, Rob & Crosbie, Tracey, 2009. "Potential for reducing electricity demand for lighting in households: An exploratory socio-technical study," Energy Policy, Elsevier, vol. 37(3), pages 1021-1031, March.
    10. Peter C. Reiss & Matthew W. White, 2005. "Household Electricity Demand, Revisited," Review of Economic Studies, Oxford University Press, vol. 72(3), pages 853-883.
    11. Lester D. Taylor, 1975. "The Demand for Electricity: A Survey," Bell Journal of Economics, The RAND Corporation, vol. 6(1), pages 74-110, Spring.
    12. Nicholas Stern, 2008. "The Economics of Climate Change," American Economic Review, American Economic Association, vol. 98(2), pages 1-37, May.
    13. Klemperer, Paul D, 1987. "Entry Deterrence in Markets with Consumer Switching Costs," Economic Journal, Royal Economic Society, vol. 97(388a), pages 99-117, Supplemen.
    14. Green, Richard, 2000. "Can Competition Replace Regulation for Small Utility Customers?," CEPR Discussion Papers 2406, C.E.P.R. Discussion Papers.
    15. Sorrell, Steve & Dimitropoulos, John, 2008. "The rebound effect: Microeconomic definitions, limitations and extensions," Ecological Economics, Elsevier, vol. 65(3), pages 636-649, April.
    16. Hansla, Andre & Gamble, Amelie & Juliusson, Asgeir & Garling, Tommy, 2008. "Psychological determinants of attitude towards and willingness to pay for green electricity," Energy Policy, Elsevier, vol. 36(2), pages 768-774, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Evens Salies, 2012. "Real-time pricing when consumers have saving costs," Sciences Po publications 2012-11, Sciences Po.
    2. Adnane Kendel & Nathalie Lazaric, 2015. "The diffusion of smart meters in France: A discussion of the empirical evidence and the implications for smart cities," Post-Print halshs-01246427, HAL.
    3. repec:spo:wpecon:info:hdl:2441/c6t1fl36hv9s7q89j8m3l01c9 is not listed on IDEAS
    4. Salies, Evens, 2013. "Real-time pricing when some consumers resist in saving electricity," Energy Policy, Elsevier, vol. 59(C), pages 843-849.

    More about this item

    Keywords

    pricing structure; environment; electricity; consumer switching costs;

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • D1 - Microeconomics - - Household Behavior

    Statistics

    Access and download statistics

    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:ebl:ecbull:eb-10-00207. 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: (John P. Conley). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.