The Long-Run Dynamics of Electricity Demand: Evidence from Municipal Aggregation

Tatyana Deryugina, Alexander MacKay and Julian Reif

American Economic Journal: Applied Economics, 2020, vol. 12, issue 1, 86-114

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.

JEL-codes: L94 L98 Q41 Q48 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (45)

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Working Paper: The Long-Run Dynamics of Electricity Demand: Evidence from Municipal Aggregation (2017)
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DOI: 10.1257/app.20180256

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