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Does energy consumption respond to price shocks ? evidence from a regression-discontinuity design
Author:Bastos, Paulo; Castro, Lucio; Cristia, Julian; Scartascini, Carlos; Collection Title:Policy Research working paper ; no. WPS 6785Impact Evaluation series ; no. IE 116
Country:World; Date Stored:2014/02/25
Document Date:2014/02/01Document Type:Policy Research Working Paper
SubTopics:Energy Production and Transportation; Climate Change Economics; Economic Theory & Research; Markets and Market Access; ConsumptionLanguage:English
Major Sector:Industry and tradeRel. Proj ID:1W-Trade Costs And Development -- -- P133550;
Region:The World RegionReport Number:WPS6785
Sub Sectors:Other domestic and international tradeTF No/Name:TF013652-Trade costs and development
Volume No:1 of 1  

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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