The (Alleged) Environmental and Social Benefits of Dynamic Pricing

Matthew Harding (), Kyle Kettler (), Carlos Lamarche and Lala Ma
Additional contact information
Matthew Harding: University of California, Irvine
Kyle Kettler: University of California, Irvine

No 14846, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper provides a cautionary tale about claiming environmental costs and benefits when justifying the use of public funds. Using the example of a dynamic pricing policy, we show that the resulting impact on short-term operating costs and emissions is at best ambiguous. Moreover, it is hard to quantify 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. While dynamic pricing has been touted as a means to control generation costs and pollution, price-induced reallocation of electricity consumption within a day may actually increase net emissions depending on the source-generation mix of a region.

Keywords: load shifting; randomized experiment; dynamic pricing; air pollution (search for similar items in EconPapers)
JEL-codes: D12 L11 L94 Q53 Q58 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2021-11
New Economics Papers: this item is included in nep-ene, nep-env, nep-reg and nep-res
References: View references in EconPapers View complete reference list from CitEc
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Published - published in: Journal of Economic Behavior and Organization, 2023, 205, 574-593

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Journal Article: The (alleged) environmental and social benefits of dynamic pricing (2023)
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