Template-Type: ReDIF-Paper 1.0
Author-Name: Danon Alejandro M.
Author-Name-First: Alejandro M.
Author-Name-Last: Danon
Author-Name: Diaz-Campo Cecilia S.
Author-Name-First: Cecilia S.
Author-Name-Last: Diaz-Campo
Author-Name: Gars Jared
Author-Name-First: Jared
Author-Name-Last: Gars
Author-Name: Kestelman Borges Mariana
Author-Name-First: Mariana
Author-Name-Last: Kestelman Borges
Author-Name: Zulli Lourdes
Author-Name-First: Lourdes
Author-Name-Last: Zulli
Title: Unveiling the Energy Price Elasticity: Exploring the Impact of Price Shocks through Regression Discontinuity Design
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.
Length:  42 pages
Creation-Date:  2023-11
File-URL: https://aaep.org.ar/works/works2023/4639.pdf
File-Format: Application/pdf
Number: 4639
Classification-JEL: L95, D12
Handle: RePEc:aep:anales:4639