Are two-part tariffs efficient when consumers plan ahead?: An empirical study

Laura Fernàndez-Villadangos ()
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Laura Fernàndez-Villadangos: Grup de Recerca en Polítiques Públiques i Regulació Económiques (GPRE), Institut de Recerca d'Economia Aplicada (IREA), Departament de Política Econòmica i EEM, Universitat de Barcelona

No CREAP2006-04, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

Abstract: During the last two decades there has been an increase in using dynamic tariffs for billing household electricity consumption. This has questioned the suitability of traditional pricing schemes, such as two-part tariffs, since they contribute to create marked peak and offpeak demands. The aim of this paper is to assess if two-part tariffs are an efficient pricing scheme using Spanish household electricity microdata. An ordered probit model with instrumental variables on the determinants of power level choice and non-paramentric spline regressions on the electricity price distribution will allow us to distinguish between the tariff structure choice and the simultaneous demand decisions. We conclude that electricity consumption and dwellings’ and individuals’ characteristics are key determinants of the fixed charge paid by Spanish households Finally, the results point to the inefficiency of the two-part tariff as those consumers who consume more electricity pay a lower price than the others.

Keywords: Regulation; electricity; consumer behavior: empirical analysis. (search for similar items in EconPapers)
JEL-codes: D12 L94 Q41 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2006-10, Revised 2006-10
New Economics Papers: this item is included in nep-dcm, nep-ene, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.xreap.cat/RePEc/xrp/pdf/CREAP2006-04.pdf First version, 2006 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/CREAP2006-04.pdf Revised version, 2006 (application/pdf)

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