The long-run price elasticity of residential demand for electricity: Results from a natural experiment |
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Affiliation: | 1. American University of Beirut, PO Box 11-0236, Riad El Solh 1107 2020, Beirut, Lebanon;2. National Renewable Energy Laboratory, 15013 Denver West Parkway, Golden, CO 80401, USA;1. Department of Asian and Policy Studies, Education University of Hong Kong, Hong Kong;2. Department of Economics, University of Texas at Austin, TX 78713, USA;3. School of Accounting and Finance, Hong Kong Polytechnic University, Hong Kong;4. Energy and Environmental Economics, Inc., 101 Montgomery Street, Suite 1600, San Francisco, CA 94104, USA;1. Department of Economics, Hong Kong Baptist University, Kowloon Tong, Hong Kong, China;2. Shenzhen Audencia Financial Technology Institute, Shenzhen University, Guangdong, China;3. Canberra School of Politics, Economics & Society, University of Canberra, Australian Capital Territory, Australia;4. Department of Asian and Policy Studies, Education University of Hong Kong, Hong Kong, China;5. Coller School of Management, Tel Aviv University, Tel Aviv, 69978, Israel;6. Department of Economics, University of Texas at Austin, Austin, TX, 78712, USA;1. CEFUP and Faculdade de Economia da Universidade do Porto (FEP), R. Roberto Frias, 4200–464 Porto, Portugal;2. CEFUP and FEP, R. Roberto Frias, 4200-464 Porto, Portugal;3. GOVCOPP - Unidade de Investigação em Governança, Competitividade e Políticas Públicas DEGEIT - Departamento de Economia, Gestão, Engenharia Industrial e Turismo, Universidade de Aveiro, Portugal |
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Abstract: | In one of two otherwise similar adjacent regions in a Canadian province, the price of electricity changed abruptly, substantially, and permanently. That natural experiment allows for a simple differences-in-differences calculation of the long-run price elasticity of residential demand for electricity. This analysis is of interest for two reasons. First, it is a rare circumstance when such a methodology can be used. Secondly, the magnitude of the elasticity estimate has substantial implications for utilities, regulators, and policymakers. |
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Keywords: | Residential demand for electricity Price elasticity Difference-in-differences |
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