Advanced seminar in Economics - Nicolai Kuminoff (Arizona State University)

Socially Efficient Menu Design for Residential Electricity Plans

We study how to design a menu of electricity price schedules to steer a population of heterogeneous households to shift consumption to periods when the marginal social cost of generation is lower. We provide market-based evidence on how households sort over a large menu of static and dynamic plans and adjust their consumption in response to hourly price changes. The results guide our development of a new model of plan choice and consumption, which we estimate and use to evaluate counterfactual menu designs. Our analysis uses administrative data on a dynamic panel of eight thousand households making 750 million consumption decisions.

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