The (alleged) environmental and social benefits of dynamic pricing

Matthew Harding, Kyle Kettler, Carlos Lamarche and Lala Ma

Journal of Economic Behavior & Organization, 2023, vol. 205, issue C, 574-593

Abstract: Dynamic pricing programs have the potential to better align the price and social marginal costs of electricity production in the presence of time-varying external impacts on environmental quality. Using a particular dynamic pricing implementation, we show that the resulting impact on short-term operating costs and emissions is at best ambiguous. Moreover, we highlight the difficulty in quantifying impacts across geographic regions even in ideal scenarios where data is plentiful and the behavioral response can be estimated precisely using a randomized control trial of customers of an electric utility. Our findings point to price-induced reallocation of electricity consumption within a day as the underlying causal mechanism that may increase net emissions depending on the source-generation mix of a region.

Keywords: Dynamic pricing; Randomized experiment; Load shifting; Air pollution (search for similar items in EconPapers)
JEL-codes: D12 L11 L94 Q53 Q58 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: The (Alleged) Environmental and Social Benefits of Dynamic Pricing (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:205:y:2023:i:c:p:574-593

DOI: 10.1016/j.jebo.2022.11.010

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