Abstract
We study the dynamics of residential electricity demand by exploiting a natural experiment that produced large and long-lasting price changes in over 250 Illinois communities. Using a flexible difference-in-difference matching approach, we estimate that the price elasticity of demand grows from-0.09 in the first six months to-0.27 two years later. We find similar results with a dynamic model in which usage is a function of past and future prices. Our findings highlight the importance of accounting for consumption dynamics when evaluating energy policy.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 86-114 |
| Number of pages | 29 |
| Journal | American Economic Journal: Applied Economics |
| Volume | 12 |
| Issue number | 1 |
| DOIs | |
| State | Published - Jan 1 2020 |
ASJC Scopus subject areas
- General Economics, Econometrics and Finance