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Does it matter when a power outage occurs? -- A choice experiment study on the willingness to pay to avoid power outages

  • Carlsson, Fredrik
  • Martinsson, Peter

Using a choice experiment survey, the marginal willingness to pay (WTP) among Swedish households for reductions in power outages is estimated. The results from the random parameter logit estimation indicate that the marginal WTP increases with the duration of the outages, and is higher if the outages occur during weekends and during winter months. Moreover, the random parameter logit model allows us to estimate a sample distribution of WTP and we find a significant unobserved heterogeneity in some of the outage attributes. Given that households have negative welfare effects from outages, it is important that policy makers consider these negative impacts on household utility when regulating the Swedish electricity market.

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File URL: http://www.sciencedirect.com/science/article/B6V7G-4NN1TMP-2/1/4d9bf13f4da9fb4c665dffeb9a906a77
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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 30 (2008)
Issue (Month): 3 (May)
Pages: 1232-1245

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Handle: RePEc:eee:eneeco:v:30:y:2008:i:3:p:1232-1245
Contact details of provider: Web page: http://www.elsevier.com/locate/eneco

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  1. Peter Martinsson, 2002. "Using Choice Experiments for Non-Market Valuation," EEPSEA Special and Technical Paper sp200205t2, Economy and Environment Program for Southeast Asia (EEPSEA), revised May 2002.
  2. Michael J. Doane & Raymond S. Hartman & Chi-Keung Woo, 1988. "Households' Perceived Value of Service Reliability: An Analysis of Contingent Valuation Data," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 135-150.
  3. Beenstock, Michael & Goldin, Ephraim & Haitovsky, Yoel, 1998. "Response bias in a conjoint analysis of power outages," Energy Economics, Elsevier, vol. 20(2), pages 135-156, April.
  4. Michael J. Doane & Raymand S. Hartman & Chi-Keung Woo, 1988. "Household Preference for Interruptible Rate Options and the Revealed Value of Service Reliability," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 121-134.
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