Switching on Electricity Demand Response: Evidence for German Households

23 Pages Posted: 25 Nov 2016

See all articles by Manuel Frondel

Manuel Frondel

RWI Leibniz Institute for Economic Research ; Ruhr University Bochum (RUB)

Gerhard Kussel

RWI – Leibniz Institute for Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: November 23, 2016

Abstract

Empirical evidence on the response of German households to electricity price changes is sparse. Using panel data originating from Germany’s Residential Energy Consumption Survey (GRECS), we fill this void by employing an instrumental variable approach to cope with the endogeneity of the consumers’ tariff choice. By additionally exploiting our information on the households’ knowledge about power prices, we also employ an Endogenous Switching Regression Model to estimate price elasticities for two groups of households, finding that only those households that are informed about prices are sensitive to price changes, whereas the electricity demand of uninformed households is entirely price-inelastic.

Keywords: Price Elasticity, Switching Regression Model, Information.

JEL Classification: Q41, D12.

Suggested Citation

Frondel, Manuel and Kussel, Gerhard, Switching on Electricity Demand Response: Evidence for German Households (November 23, 2016). Available at SSRN: https://ssrn.com/abstract=2874844 or http://dx.doi.org/10.2139/ssrn.2874844

Manuel Frondel (Contact Author)

RWI Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany

Ruhr University Bochum (RUB) ( email )

Universitätsstraße 150
Bochum, NRW 44780
Germany

Gerhard Kussel

RWI – Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

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