Imperfect information and inattention to energy costs are important potential motivations for energy efficiency standards and subsidies. We evaluate these motivations in the lightbulb market using a theoretical model and two randomized experiments. We derive welfare effects as functions of reduced-form sufficient statistics capturing economic and psychological parameters, which we estimate usin...

The Effect of Power Outages and Cheap Talk on Willingness to Pay to Reduce Outages Using an open-ended contingent valuation survey, we analyze how (i) experience of a power outage due to one of the worst storms ever to hit Sweden and (ii) a cheap talk script affect respondents’ WTP to avoid power outages. Experience significantly increases and a cheap talk script decreases the proportion of res...

Integrated assessment models lack a microeconomic foundation in modelling environmental damages to the economy. To overcome this, damage coefficients are incorporated in standard microeconomic models. Firms and consumers take both damages and prices as given. Demand, supply, profit and expenditure functions under damage coefficients are derived that allow easy implementation in applied economic...

Imperfect information about product attributes inhibits efficiency in many choice settings, but can be overcome by providing simple, low-cost information. Using a field experiment, we test the effect of high-frequency information about residential electricity usage on the price elasticity of demand. Informed households are three standard deviations more responsive to temporary price increases, ...

This paper considers an econometric approach to measuring substitutability of three types of energy, i.e. crude oil, electricity and diesel with capital and labour in the manufacturing sector of Greek industry during the period 1970]1990. A general dynamic framework is developed under the assumption that the structure of the production process is weakly separable in capital, labour and energy a...

We estimate the development effects of electrification across Brazil over the period 1960–2000. We simulate a time series of hypothetical electricity grids for Brazil for the period 1960–2000 that show how the grid would have evolved had infrastructure investments been made based solely on geography-based cost considerations. Using the model as an instrument, we document large positive effects ...

We explore a methodological improvement to the standard dynamic demand model for petrol–a general model which allows for slowly evolving, unobservable habits. If this habit formation model is correct, then standard estimation techniques produce inconsistent estimates. We find price elasticities of -0.13 (short-run) and -0.20 (long-run). Importantly, standard techniques are misleading about the ...

For a stable supply of electricity power plants are required to provide ancillary services in addition to energy production. This paper suggests a solution for optimal bidding strategy for hydroelectric units operating in markets where both energy and ancillary services are priced simultaneously. The model is illustrated on a numerical example of a hydro unit operating in such markets of New Yo...

This paper develops a theoretical framework of consumer learning and product valuation when attending to new information is costly. The key attribute of the model is that agents are unsure what product characteristics are present in a good. In the model increased beliefs that a good contains valuable attributes serves to increase learning and, possibly, willingness to pay for the good. We devel...

abstract in this study, we applied recently developed panel unit root and cointegration techniques to examine the long-run real income per capita and price elasticities for demand of electricity in selected middle east and north african (mena) countries using an annual data series from 1990 to 2011.our main finding from the panel analysis is that the demand for electricity is highly price elast...