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Breaking Routine for Energy Savings: An Appliance-level Analysis of Small Business Behavior under Dynamic Prices

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  • Jiyong Eom
  • Frank A. Wolak

Abstract

Small businesses are typically committed to providing a positive customer experience and therefore may exhibit a response to dynamic electricity prices different from residential or industrial customers. We conduct a field experiment to determine the extent to which small businesses respond through re-configuration of typical routines throughout the experiment period versus through adjustments to specific dynamic pricing events. Using a customer-level survey of appliance ownership, we estimate the hourly response patterns of individual appliances to participation in the experiment versus individual dynamic pricing events. Consistent with our re-configuration hypothesis, small businesses primarily curtail electricity usage throughout the experiment period, although we also find a small imprecisely estimated response to dynamic pricing events on top of the re-configuration effect. Appliances not critical to a positive customer experience such as dish dryers, food storage units, lights, electric motors & pumps, and industrial heaters are the major sources of the energy savings from the re-configuration actions of these small businesses.

Suggested Citation

  • Jiyong Eom & Frank A. Wolak, 2020. "Breaking Routine for Energy Savings: An Appliance-level Analysis of Small Business Behavior under Dynamic Prices," NBER Working Papers 27263, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27263
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    References listed on IDEAS

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    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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