Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/250507 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14846
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper provides a cautionary tale about claiming environmental costs and benefits when justifying the use of public funds. Using the example of a dynamic pricing policy, we show that the resulting impact on short-term operating costs and emissions is at best ambiguous. Moreover, it is hard to quantify even in ideal scenarios where data is plentiful and the behavioral response can be estimated precisely using a randomized control trial of customers of an electric utility. While dynamic pricing has been touted as a means to control generation costs and pollution, price-induced reallocation of electricity consumption within a day may actually increase net emissions depending on the source-generation mix of a region.
Subjects: 
dynamic pricing
randomized experiment
load shifting
air pollution
JEL: 
D12
L11
L94
Q53
Q58
Document Type: 
Working Paper

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