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The effect of price on electricity contract choice
Umeå University, Faculty of Social Sciences, Center for Environmental and Resource Economics (CERE).
2018 (English)In: Energy Economics, ISSN 0140-9883, E-ISSN 1873-6181, Vol. 69, p. 59-70Article in journal (Refereed) Published
Abstract [en]

I explore how households switch between fixed-price and variable-price electricity contracts in response to variations in price and temperature, conditional on previous contract choice. Using panel data with roughly 54,000 Swedish households, a dynamic probit model is estimated. The results suggest that the choice of contract exhibits substantial state dependence, with an estimated marginal effect of previous contract choice of 0.96, and that the short-run effects of variation in prices and temperature on the choice of electricity contract are small. Further, the state dependence and price responsiveness are similar across housing types, income levels and other dimensions. A plausible explanation of these results is that transaction costs are perceived to be larger than the relatively small cost savings from switching between contracts.

Place, publisher, year, edition, pages
Elsevier, 2018. Vol. 69, p. 59-70
Keywords [en]
Electricity contract choice, Residential electricity demand, Demand flexibility, Transaction costs
National Category
Economics
Identifiers
URN: urn:nbn:se:umu:diva-145388DOI: 10.1016/j.eneco.2017.10.039ISI: 000424309500005OAI: oai:DiVA.org:umu-145388DiVA, id: diva2:1186846
Available from: 2018-03-01 Created: 2018-03-01 Last updated: 2018-06-09Bibliographically approved

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Vesterberg, Mattias

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