Working Paper: NBER ID: w27263
Authors: Jiyong Eom; Frank A. Wolak
Abstract: Small businesses are typically committed to providing a positive customer experience and therefore may exhibit a response to dynamic electricity prices different from residential or industrial customers. We conduct a field experiment to determine the extent to which small businesses respond through re-configuration of typical routines throughout the experiment period versus through adjustments to specific dynamic pricing events. Using a customer-level survey of appliance ownership, we estimate the hourly response patterns of individual appliances to participation in the experiment versus individual dynamic pricing events. Consistent with our re-configuration hypothesis, small businesses primarily curtail electricity usage throughout the experiment period, although we also find a small imprecisely estimated response to dynamic pricing events on top of the re-configuration effect. Appliances not critical to a positive customer experience such as dish dryers, food storage units, lights, electric motors & pumps, and industrial heaters are the major sources of the energy savings from the re-configuration actions of these small businesses.
Keywords: dynamic pricing; demand response; small businesses; energy savings; field experiment
JEL Codes: Q4; Q41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| dynamic pricing (D49) | electricity consumption (L94) |
| reconfiguration of appliance use (L68) | electricity consumption (L94) |
| dynamic pricing events (D49) | electricity consumption (L94) |
| non-service critical appliances (L68) | energy savings (Q41) |
| business routines (L14) | demand response to dynamic pricing (L97) |