Jo, Jinmahn

Many studies have found that a range of time-varying electricity rates reduce (aggregate) household electricity consumption during peak-demand hours. However, little is known about how such a reduction is achieved according to temperature and price variations, particularly under Time-Of-Use (TOU) pricing. In this paper, I re-examine the impact of introducing TOU pricing on residential electricity consumption with a novel approach that decomposes household electricity consumption into two distinct channels by utilizing the variation in daily heating degree days: consumption for non-temperature control and temperature control purposes. My empirical analysis suggests that TOU-pricing-induced reduction in temperature control-driven electricity consumption evolves in a U-shape over households' heating needs during peak-demand hours, and that on typical winter days in Ireland, it accounts for more than half of the total reduction caused by switching to TOU pricing---and therefore, the performance of the dynamic pricing widely varies across days. I also find evidence that household electricity consumption for non-temperature control uses is responsive, in and near peak hours, to incremental changes in peak-demand-hour price, while that for temperature control is not. I scrutinize the alterations in households' consumption behavior implied by my empirical results. In addition, I discuss the policy implications of my empirical findings.

The existing literature has found that marginal price is usually not what households perceive for nonlinear price schedules. In this paper, I re-examine how households respond to marginal prices signaled through their monthly electricity bills under Increasing-Block Pricing. Using household-level monthly billing statement data, I find evidence that residential electricity consumption is, at least partly, driven by marginal price: in a given billing month, households respond to the discontinuous growth of marginal price in the past billing month, which is not accompanied by any change in average price. I discuss the policy implications of the existence of households that apply the lagged marginal price, which reflects not their contemporaneous consumption but their consumption history, to all units of electricity consumption during a billing cycle rather than to the last unit.

Our empirical analysis of detailed well-level data on horizontal wells drilled in North Dakota finds that fracking firms in North Dakota drilled well sites with different levels of resource quality simultaneously. This stylized fact, however, is not well explained by utilizing the Hotelling-style models of exhaustible resource extraction that have been developed so far. In this paper, we construct a continuous-time Discrete Choice Dynamic Programming (DCDP) framework that formulates the firms' drilling decisions as an optimal stopping problem that trades off drilling a given well site today against drilling it at some time in the future to rationalize the firms' drilling activity observed in North Dakota. We also examine the equilibrium dynamics implied by the DCDP model in continuous time, which is tractable not only analytically at the market level but also empirically using microeconomic data.