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Are Consumers Attentive to Local Energy Costs? Evidence from the Appliance Market

Sébastien Houde, Erica Myers

NBER Working Paper No. 25591
Issued in February 2019
NBER Program(s):Environment and Energy Economics

We estimate whether consumers respond to local energy costs when purchasing appliances. Using a dataset from an appliance retailer, we compare demand responsiveness to a measure of energy costs that varies with local energy prices versus purchase prices. We strongly reject that consumers are unresponsive to local energy costs under a wide range of assumptions. These findings run counter to the popular wisdom, which motivates energy standards, that energy costs are a shrouded attribute. Capital investments are an important channel for electricity demand response and may explain some of the large differences between short and long run electricity price elasticities.

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Document Object Identifier (DOI): 10.3386/w25591

 
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