Autor: Deza Matias, Saracho Abril
Institución: UNT
Año: 2024
JEL: Q4, H3
Resumen:
Energy price elasticities for residential consumers is probably the most important variable to define policies regarding concerns about sustainability, efficiency and equitability. However, estimating consumer response to price changes is complex due to simultaneous demand shocks, regulatory constraints and complex consumer response for this market. This paper estimates the short- and long-term price elasticity of residential energy consumption using a natural experiment from the implementation of the Social Electricity Tariff in Tucumán, Argentina. This policy, aimed at assisting vulnerable households, provided a subsidy to the fixed charge of the electricity tariff. A difference-in-differences approach is employed, using non-beneficiary households as the control group. This allows us to calculate the price elasticity of electricity consumption across different consumption levels. Our findings show that, in general, the price elasticity of consumption is inelastic, with a more pronounced effect among lower consumption users. Additionally, the long-term effect is greater for highly vulnerable users. This study provides the first estimates of short- and long-term price elasticity for Latin America using this identification strategy, offering valuable insights for the design of energy policies.