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Increasing Block Tariff Electricity Pricing and the Propensity to Purchase Dirty Fuels: Empirical Evidence from a Natural Experiment

Author

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  • Karel Janda

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University & Faculty of Finance and Accounting, Prague University of Economics and Business, Prague, Czech Republic)

  • Salim Turdaliev

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)

Abstract

This paper investigates the relationship between the increasing-block-tariffs (IBT) for electricity, and the propensity of households to purchase dirty fuels. We combine RLMS-HSE, a panel household data, with the introduction of the IBT schemes for residential electricity in three experimental regions of Russia to analyze this relationship. Using differences-in-differences empirical specifications we find that the propensity to purchase dirty fuels has increased in the regions where the IBT schemes were introduced. Depending on the specification, and the type of household we find that the size of the increase varies from more than 3-percentage points to about 15-percentage points. This accounts for a roughly 70% increase, and a 90% increase respectively compared to the similar households in the regions that did not implement IBT pricing schemes for residential electricity. The empirical evidence from this paper suggests that the environmental benefits that result from the implementation of the IBT pricing schemes may be overstated if the possible negative environmental impacts of switching to more affordable, but hazardous energy sources by the population as a response to the tariff-shifts are not taken into account by the policymakers.

Suggested Citation

  • Karel Janda & Salim Turdaliev, 2022. "Increasing Block Tariff Electricity Pricing and the Propensity to Purchase Dirty Fuels: Empirical Evidence from a Natural Experiment," Working Papers IES 2022/08, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised May 2022.
    • Handle: RePEc:fau:wpaper:wp2022_08
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    File URL: https://ies.fsv.cuni.cz/en/veda-vyzkum/working-papers/6614
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    Cited by:

    1. Simonovits, András & Kotek, Péter & Horváth, Gábor & Takácsné Tóth, Borbála, 2023. "Az energiaárak támogatása Magyarországon - egy egyszerű modell [Subsidizing energy prices in Hungary - a simple model]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 589-612.

    More about this item

    Keywords

    residential electricity pricing; increasing-block-tariffs; CO2 emissions; dirty fuels; transition economy; natural experiment;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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