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The effects of progressive pricing on household electricity use

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  • Youn, Hyungho
  • Jin, Hyun Joung

Abstract

This paper proposes a model to calculate the magnitude of the reduction in household electricity use that results from a progressive pricing policy, relative to the case where uniform pricing is implemented. To quantify such an effect, a theoretical model is developed for household electricity use, and then it is applied to the progressive pricing policy for electricity in Seoul, South Korea, to empirically derive the magnitude of the reduction in household electricity use. The results suggest that progressive pricing reduces the elasticity in demand for household electricity in the summer. That is, the progressive pricing policy has a curbing effect. Therefore, households would consume a higher amount of electricity in the summer without progressive pricing.

Suggested Citation

  • Youn, Hyungho & Jin, Hyun Joung, 2016. "The effects of progressive pricing on household electricity use," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1078-1088.
    • Handle: RePEc:eee:jpolmo:v:38:y:2016:i:6:p:1078-1088
    DOI: 10.1016/j.jpolmod.2016.06.001
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    Cited by:

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    3. Ouédraogo, S. & Faggianelli, G.A. & Notton, G. & Duchaud, J.L. & Voyant, C., 2022. "Impact of electricity tariffs and energy management strategies on PV/Battery microgrid performances," Renewable Energy, Elsevier, vol. 199(C), pages 816-825.
    4. Cheng, Fei & Chen, Tong & Chen, Qiao, 2020. "Rewards based on public loyalty program promote cooperation in public goods game," Applied Mathematics and Computation, Elsevier, vol. 378(C).
    5. Matar, Walid, 2018. "Households' response to changes in electricity pricing schemes: Bridging microeconomic and engineering principles," Energy Economics, Elsevier, vol. 75(C), pages 300-308.
    6. Prasanna, Ashreeta & Mahmoodi, Jasmin & Brosch, Tobias & Patel, Martin K., 2018. "Recent experiences with tariffs for saving electricity in households," Energy Policy, Elsevier, vol. 115(C), pages 514-522.
    7. Jerzy Andruszkiewicz & Józef Lorenc & Agnieszka Weychan, 2019. "Demand Price Elasticity of Residential Electricity Consumers with Zonal Tariff Settlement Based on Their Load Profiles," Energies, MDPI, vol. 12(22), pages 1-22, November.
    8. Zhang, Xinhua & Hueng, C. James & Lemke, Robert J., 2023. "A self-selection pricing mechanism for residential electricity: Measures of sustainability and equity to balance market mechanisms and government controls," Journal of Policy Modeling, Elsevier, vol. 45(6), pages 1167-1183.
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    More about this item

    Keywords

    Electricity consumption; Household electricity demand; Progressive pricing; Curbing effect;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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