Title: Time-of-use pricing and electricity demand response: evidence from a sample of Italian industrial customers

Authors: Graziano Abrate

Addresses: Hermes Research Centre (Collegio Carlo Alberto), Via Real Collegio 30, 10024 Moncalieri (TO), Italy; University of Piemonte Orientale, Faculty of Economics, Via Perrone 18, 28100 Novara, Italy

Abstract: The introduction of real time pricing in many wholesale market as well as the liberalisation process involving the retail market poses the attention over the measurement of demand response to time differentiated price signals. This paper shows an example of how to estimate elasticities of substitution across time using a sample of Italian industrial customers facing time-of-use (TOU) pricing schemes. The model involves the estimation of a nested constant elasticity of substitution (CES) input demand function, which allows estimating substitutability of electricity usage across hourly intervals within a month and across different months.

Keywords: electricity market; time-of-use pricing; substitution elasticity; retail competition; electricity demand; Italy; industrial customers; real time pricing; electricity usage.

DOI: 10.1504/IJAMS.2008.020037

International Journal of Applied Management Science, 2008 Vol.1 No.1, pp.21 - 40

Published online: 21 Aug 2008 *

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