Switching on electricity demand response: Evidence for German households
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Date
2016
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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.
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Keywords
price elasticity, information, switching regression model