How do consumers respond to price complexity? Experimental evidence from the power sector

A-Tier
Journal: Journal of Environmental Economics and Management
Year: 2022
Volume: 116
Issue: C

Authors (2)

Jacobsen, Grant D. (University of Oregon) Stewart, James I. (not in RePEc)

Score contribution per author:

2.011 = (α=2.01 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Spurred in part by growing production from renewable sources and adoption of electric vehicles, time-variant pricing programs for electricity are increasingly being used to influence the shape of residential demand. The most common time-variant prices are time-of-use (TOU) prices, which vary by hour of day, and event-based prices, which take effect during idiosyncratic “critical” events. We present evidence on the effects of TOU prices and event-based prices when implemented in isolation versus simultaneously. The key finding is that time-variant prices reduce demand during critical events by 19% when event-based pricing is implemented in isolation, but only 5% when TOU and event-based prices are implemented together, despite both price schemes creating similar financial incentives. The results suggest that price complexity may dull consumer responsiveness to price signals.

Technical Details

RePEc Handle
repec:eee:jeeman:v:116:y:2022:i:c:s0095069622000754
Journal Field
Environment
Author Count
2
Added to Database
2026-01-25