Time-of-Use Prices and Electricity Demand: Allowing for Selection Bias in Experimental Data

RAND JOURNAL OF ECONOMICS, Vol. 27, No. 0, Special Issue

Posted: 19 Feb 1997

See all articles by John C. Ham

John C. Ham

National University of Singapore (NUS) - Department of Economics

Dean C. Mountain

McMaster University - Michael G. DeGroote School of Business

M. W. Luke Chan

McMaster University

Abstract

We address self-selection in time-of-use experiments. Our methodology is especially appropriate when 1) theory does not provide an exclusion restriction between the participation and consumption equations, or 2) the demand system contains a large number of parameters estimated from a difficult objective function. We find that correcting for selection bias is important. Generally, small commercial establishments are not very responsive to time-of-use pricing. However, for some subgroups (such as those with neither electric heating nor air conditioning), significant responsiveness occurs given a sufficiently short peak period and a sufficiently large peak/off-peak price differential.

JEL Classification: L81, C10

Suggested Citation

Ham, John C. and Mountain, Dean C. and Chan, Luke M.W., Time-of-Use Prices and Electricity Demand: Allowing for Selection Bias in Experimental Data. RAND JOURNAL OF ECONOMICS, Vol. 27, No. 0, Special Issue, Available at SSRN: https://ssrn.com/abstract=4667

John C. Ham (Contact Author)

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link, AS2 #06-02
Singapore 117570, Singapore 119077
Singapore

Dean C. Mountain

McMaster University - Michael G. DeGroote School of Business ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

Luke M.W. Chan

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

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