IDEAS home Printed from https://ideas.repec.org/p/aep/anales/4639.html
   My bibliography  Save this paper

Unveiling the Energy Price Elasticity: Exploring the Impact of Price Shocks through Regression Discontinuity Design

Author

Listed:
  • Danon Alejandro M.
  • Diaz-Campo Cecilia S.
  • Gars Jared
  • Kestelman Borges Mariana
  • Zulli Lourdes

Abstract

Understanding how electricity demand responds to price shocks is a key question for a number of actors along the electricity supply chain as well as policy makers, albeit its estimation present several challenges. In this paper, we exploit a natural experiment to estimate the short-run impact of a price shock on residential electricity consumption. In particular, in January of 2021 the utility company adopted a new tariff schedule whereby the fixed component of the tariff was organized in four tiers based on households’ annual moving average consumption, which we exploit in a regression-discontinuity design. Despite the large average price increases at each fixed-cost cutoff, we find no significant effect of the tariff change on subsequent electricity consumption around the three thresholds. This lack of demand response to prices suggests that non-price instruments may be more effective at influencing residential electricity consumption.

Suggested Citation

  • Danon Alejandro M. & Diaz-Campo Cecilia S. & Gars Jared & Kestelman Borges Mariana & Zulli Lourdes, 2023. "Unveiling the Energy Price Elasticity: Exploring the Impact of Price Shocks through Regression Discontinuity Design," Asociación Argentina de Economía Política: Working Papers 4639, Asociación Argentina de Economía Política.
    • Handle: RePEc:aep:anales:4639
    as

    Download full text from publisher

    File URL: https://aaep.org.ar/works/works2023/4639.pdf
    Download Restriction: no
    ---><---

    More about this item

    JEL classification:

    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:aep:anales:4639. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Juan Manuel Quintero (email available below). General contact details of provider: https://edirc.repec.org/data/aaeppea.html .

    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.