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Does energy consumption respond to price shocks ? evidence from a regression-discontinuity design

Paulo Bastos, Lucio Castro, Julian Cristia () and Carlos Scartascini ()

No 6785, Policy Research Working Paper Series from The World Bank

Abstract: This paper exploits unique features of a recently introduced tariff schedule for natural gas in Buenos Aires to estimate the short-run impact of price shocks on residential energy utilization. The schedule induces a nonlinear and non-monotonic relationship between households'accumulated consumption and unit prices, thus generating exogenous price variation, which is exploited in a regression-discontinuity design. The results reveal that a price increase causes a prompt and significant decline in gas consumption. They also indicate that consumers respond more to recent past bills than to expected prices, which argues against the assumption that consumers have perfect awareness of complex price schedules.

Keywords: Consumption; Climate Change Economics; Economic Theory&Research; Energy Production and Transportation; Markets and Market Access (search for similar items in EconPapers)
Date: 2014-02-01
New Economics Papers: this item is included in nep-agr and nep-ene
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Related works:
Journal Article: Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design (2015) Downloads
Working Paper: Does Energy Consumption Respond to Price Shocks?: Evidence from a Regression-Discontinuity Design (2011) Downloads
Working Paper: Does Energy Consumption Respond to Price Shocks? Evidence from a Regression-Discontinuity Design (2011) Downloads
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