Dynamic Pricing and Its Discontents

7 Pages Posted: 7 Nov 2011

Date Written: November 1, 2011


Energy economists and others have long advocated dynamic pricing — the use of different prices that reflect actual costs — for electricity supply. Politicians and some consumer advocates have been reluctant to embrace dynamic pricing because, they claim, it would be harmful to consumers, especially low-income consumers. This paper examines the results of a large number of dynamic pricing programs in the United States and around the world, and find that the concerns about consumers are misplaced. In these pilot programs, dynamic pricing regularly results in lower consumer costs, strong consumer response, and positive consumer feedback — even for low-income consumers.

Suggested Citation

Faruqui, Ahmad and Palmer, Jennifer, Dynamic Pricing and Its Discontents (November 1, 2011). Regulation, Vol. 34, No. 3, p. 16, Fall 2011, Available at SSRN: https://ssrn.com/abstract=1956020

Ahmad Faruqui (Contact Author)

The Brattle Group ( email )

Suite 2800
201 Mission Street
San Francisco, CA 94105
United States

Jennifer Palmer

The Brattle Group ( email )

44 Brattle Street
3rd Floor
Cambridge, MA 02138-3736
United States

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