Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design
This paper exploits unique features of a recently introduced tariff schedule for natural gas in Buenos Aires to estimate the short-run impact of price shocks on residential energy utilization. The schedule induces a nonlinear and non-monotonic rela...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/02/19125889/energy-consumption-respond-price-shocks-evidence-regression-discontinuity-design http://hdl.handle.net/10986/17336 |
| Summary: | This paper exploits unique features of a
recently introduced tariff schedule for natural gas in
Buenos Aires to estimate the short-run impact of price
shocks on residential energy utilization. The schedule
induces a nonlinear and non-monotonic relationship between
households' accumulated consumption and unit prices,
thus generating exogenous price variation, which is
exploited in a regression-discontinuity design. The results
reveal that a price increase causes a prompt and significant
decline in gas consumption. They also indicate that
consumers respond more to recent past bills than to expected
prices, which argues against the assumption that consumers
have perfect awareness of complex price schedules. |
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