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The price elasticity of electricity demand when marginal incentives are very large

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  • Lanot, Gauthier
  • Vesterberg, Mattias
Abstract
Using unique data on Swedish households, we measure the price elasticity of electricity demand for households facing a mandatory non-linear distribution tariff, where households are charged based on their maximum consumption during a month, and where the marginal incentives are very large. We estimate the price elasticity using both 2SLS and bunching estimators, and we find that the price elasticity is smaller than what many previous studies on electricity demand have found.

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  • Lanot, Gauthier & Vesterberg, Mattias, 2021. "The price elasticity of electricity demand when marginal incentives are very large," Energy Economics, Elsevier, vol. 104(C).
    • Handle: RePEc:eee:eneeco:v:104:y:2021:i:c:s0140988321004692
    DOI: 10.1016/j.eneco.2021.105604
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    3. Hofmann, Matthias & Lindberg, Karen Byskov, 2024. "Evidence of households' demand flexibility in response to variable hourly electricity prices – Results from a comprehensive field experiment in Norway," Energy Policy, Elsevier, vol. 184(C).
    4. Rossana Riccardi & Giorgia Oggioni & Elisabetta Allevi & Abdel Lisser, 2023. "Complementarity formulation of games with random payoffs," Computational Management Science, Springer, vol. 20(1), pages 1-32, December.
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    More about this item

    Keywords

    Demand flexibility; Non-linear pricing; Peak demand;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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