The Long-Run Dynamics of Electricity Demand: Evidence from Municipal Aggregation
Tatyana Deryugina (),
Alexander MacKay and
No 23483, NBER Working Papers from National Bureau of Economic Research, Inc
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-differences 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 also estimate a more sophisticated model in which usage is a function of past and future prices, and we find similar elasticity patterns. Our findings highlight the importance of accounting for consumption dynamics when evaluating energy policy.
JEL-codes: D12 Q41 Q48 (search for similar items in EconPapers)
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