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Price elasticities of electricity demand in Switzerland: Results from a household panel

Benjamin Volland and Ivan Tilov

No 18-03, IRENE Working Papers from IRENE Institute of Economic Research

Abstract: In this paper, we use data from a new household-level panel survey to estimate short- and long-run price elasticities of residential electricity demand in Switzerland. We exploit Switzerland's unique local variation in topography-related grid maintenance costs and electricity taxation, to address endogeneity of average prices in our models. Using first difference and gradual adjustment models, we find short-run elasticities of -0.3 and long-run elasticities in excess of negative unity. Results thus suggest that a tax on electricity, as initially foreseen as a part of Switzerland's Energy Strategy 2050, is likely to have a moderate effect in the short run, but an important one in the long run.

Keywords: Residential electricity demand; price elasticity; panel data; Switzerland (search for similar items in EconPapers)
JEL-codes: C23 D12 Q41 Q48 (search for similar items in EconPapers)
Pages: 45 pages.
Date: 2018-05
New Economics Papers: this item is included in nep-ene, nep-eur and nep-reg
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