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...

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Main Authors:	Bastos, Paulo, Castro, Lucio, Cristia, Julian, Scartascini, Carlos
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	APPROACH AVERAGE PRICE AVERAGE PRICES BALANCE CAPS CHANGES IN PRICES CLIMATE CLIMATE CHANGE CONSUMER BEHAVIOR CONSUMERS CONSUMPTION LEVELS CONSUMPTION PATTERNS CRUDE OIL DEMAND FOR ELECTRICITY DEMAND FOR ENERGY DEMAND RESPONSE DEREGULATION DEVELOPMENT POLICY ECONOMETRIC ANALYSIS ECONOMETRICS ELASTICITY ELASTICITY OF DEMAND ELECTRIC UTILITY ELECTRICITY CONSUMPTION ELECTRICITY DEMAND ELECTRICITY PRICE ELECTRICITY PRICING ENERGY CONSUMPTION ENERGY DEMAND ENERGY ECONOMICS ENERGY MARKETS ENERGY POLICY ENERGY PRICE ENERGY PRICES ENVIRONMENTAL ECONOMICS ENVIRONMENTAL ISSUES FUNCTIONAL FORMS GAS CONSUMPTION GAS DISTRIBUTION GAS PRICES HOUSEHOLD ELECTRICITY CONSUMPTION HOUSEHOLD MEMBERS HOUSEHOLD SURVEY HOUSEHOLDS IMPERFECT INFORMATION INCOME INCOME ELASTICITY OF DEMAND INDUSTRIAL ECONOMICS
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

id	okr-10986-17336
recordtype	oai_dc
spelling	okr-10986-173362021-04-23T14:03:37Z Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design Bastos, Paulo Castro, Lucio Cristia, Julian Scartascini, Carlos APPROACH AVERAGE PRICE AVERAGE PRICES BALANCE CAPS CHANGES IN PRICES CLIMATE CLIMATE CHANGE CONSUMER BEHAVIOR CONSUMERS CONSUMPTION LEVELS CONSUMPTION PATTERNS CRUDE OIL DEMAND FOR ELECTRICITY DEMAND FOR ENERGY DEMAND RESPONSE DEREGULATION DEVELOPMENT POLICY ECONOMETRIC ANALYSIS ECONOMETRICS ELASTICITY ELASTICITY OF DEMAND ELECTRIC UTILITY ELECTRICITY CONSUMPTION ELECTRICITY DEMAND ELECTRICITY PRICE ELECTRICITY PRICING ENERGY CONSUMPTION ENERGY DEMAND ENERGY ECONOMICS ENERGY MARKETS ENERGY POLICY ENERGY PRICE ENERGY PRICES ENVIRONMENTAL ECONOMICS ENVIRONMENTAL ISSUES FUNCTIONAL FORMS GAS CONSUMPTION GAS DISTRIBUTION GAS PRICES HOUSEHOLD ELECTRICITY CONSUMPTION HOUSEHOLD MEMBERS HOUSEHOLD SURVEY HOUSEHOLDS IMPERFECT INFORMATION INCOME INCOME ELASTICITY OF DEMAND INDUSTRIAL ECONOMICS 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. 2014-03-18T21:39:16Z 2014-03-18T21:39:16Z 2014-02 http://documents.worldbank.org/curated/en/2014/02/19125889/energy-consumption-respond-price-shocks-evidence-regression-discontinuity-design http://hdl.handle.net/10986/17336 English en_US Policy Research Working Paper;No. 6785 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	APPROACH AVERAGE PRICE AVERAGE PRICES BALANCE CAPS CHANGES IN PRICES CLIMATE CLIMATE CHANGE CONSUMER BEHAVIOR CONSUMERS CONSUMPTION LEVELS CONSUMPTION PATTERNS CRUDE OIL DEMAND FOR ELECTRICITY DEMAND FOR ENERGY DEMAND RESPONSE DEREGULATION DEVELOPMENT POLICY ECONOMETRIC ANALYSIS ECONOMETRICS ELASTICITY ELASTICITY OF DEMAND ELECTRIC UTILITY ELECTRICITY CONSUMPTION ELECTRICITY DEMAND ELECTRICITY PRICE ELECTRICITY PRICING ENERGY CONSUMPTION ENERGY DEMAND ENERGY ECONOMICS ENERGY MARKETS ENERGY POLICY ENERGY PRICE ENERGY PRICES ENVIRONMENTAL ECONOMICS ENVIRONMENTAL ISSUES FUNCTIONAL FORMS GAS CONSUMPTION GAS DISTRIBUTION GAS PRICES HOUSEHOLD ELECTRICITY CONSUMPTION HOUSEHOLD MEMBERS HOUSEHOLD SURVEY HOUSEHOLDS IMPERFECT INFORMATION INCOME INCOME ELASTICITY OF DEMAND INDUSTRIAL ECONOMICS
spellingShingle	APPROACH AVERAGE PRICE AVERAGE PRICES BALANCE CAPS CHANGES IN PRICES CLIMATE CLIMATE CHANGE CONSUMER BEHAVIOR CONSUMERS CONSUMPTION LEVELS CONSUMPTION PATTERNS CRUDE OIL DEMAND FOR ELECTRICITY DEMAND FOR ENERGY DEMAND RESPONSE DEREGULATION DEVELOPMENT POLICY ECONOMETRIC ANALYSIS ECONOMETRICS ELASTICITY ELASTICITY OF DEMAND ELECTRIC UTILITY ELECTRICITY CONSUMPTION ELECTRICITY DEMAND ELECTRICITY PRICE ELECTRICITY PRICING ENERGY CONSUMPTION ENERGY DEMAND ENERGY ECONOMICS ENERGY MARKETS ENERGY POLICY ENERGY PRICE ENERGY PRICES ENVIRONMENTAL ECONOMICS ENVIRONMENTAL ISSUES FUNCTIONAL FORMS GAS CONSUMPTION GAS DISTRIBUTION GAS PRICES HOUSEHOLD ELECTRICITY CONSUMPTION HOUSEHOLD MEMBERS HOUSEHOLD SURVEY HOUSEHOLDS IMPERFECT INFORMATION INCOME INCOME ELASTICITY OF DEMAND INDUSTRIAL ECONOMICS Bastos, Paulo Castro, Lucio Cristia, Julian Scartascini, Carlos Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design
relation	Policy Research Working Paper;No. 6785
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Bastos, Paulo Castro, Lucio Cristia, Julian Scartascini, Carlos
author_facet	Bastos, Paulo Castro, Lucio Cristia, Julian Scartascini, Carlos
author_sort	Bastos, Paulo
title	Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design
title_short	Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design
title_full	Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design
title_fullStr	Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design
title_full_unstemmed	Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design
title_sort	does energy consumption respond to price shocks? evidence from a regression-discontinuity design
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2014/02/19125889/energy-consumption-respond-price-shocks-evidence-regression-discontinuity-design http://hdl.handle.net/10986/17336
_version_	1764436895273582592

Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design

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