Welfare Effects of Nonlinear Electricity Pricing

Abstract

Block pricing is widespread among electricity and water utilities to protect lowincome households and to encourage energy conservation through higher marginal prices. However, whether a block pricing system achieves those objectives is controversial. In this article, we analyze the impact of alternative electricity pricing systems on the welfare of consumers for the case of residential electricity block pricing in Korea. To do this, we first develop a theoretical model to compute each household's welfare change under alternative pricing systems. Then, we estimate the residential electricity demand function and compute every household's electricity consumption and expenses under alternative pricing systems. Finally, we compute each household's welfare change and social welfare to draw policy implications.

The change of lung capacity in elderly women caused by life span

“…Additional research comparing healthy people to patients with COPD has also demonstrated a lower standard of life related to health among those suffering from impaired lung function 9 ) . In addition, social and economic expenses caused by COPD are forecasted to rise steadily 10 ) , demonstrating the need to take additional measures to improve lung function.…”

Welfare gains of the poor: An endogenous Bayesian approach with spatial random effects

“…Finally, we want to perform statistical inference regarding the Equivalent Variation. This application is interesting in itself because electricity services represent a significant share of households' budgets, 1 and this fact is prominent for the poor population (Gomez-Lobo, 1996, You andLim, 2013).…”

“…within an endogenous framework to analyze these welfare implications. From a microeconomic perspective, there are three main streams: consumer surplus (Acton andMitchell, 1983, Bowitz et al, 2000), compensating variation (Gomez-Lobo, 1996, Dodonov et al, 2004 and equivalent variation (Dodonov et al, 2004, Lundgren, 2009, Ruijs, 2009, You and Lim, 2013, all of them have been estimated using frequentist approaches without consideration of uncertainty due to parameter estimates. From a theoretical standpoint, the main consideration for adopting the Bayesian approach is that it allows us to establish a statistical framework that simultaneously unifies decision theory, statistical inference, and probability theory under a single philosophically and mathematically consistent structure.…”

Welfare Gains of the Poor: An Endogenous Bayesian Approach with Spatial Random Effects

“…To the best of our knowledge, we find that few authors have studied welfare effects due to changes within block price systems, and even fewer have introduced spatial random effects within an endogenous framework to analyze these welfare implications. From a microeconomic perspective, there are three main streams: consumer surplus (Acton andMitchell, 1983, Bowitz et al, 2000), compensating variation (Gomez-Lobo, 1996, Dodonov et al, 2004 and equivalent variation (Dodonov et al, 2004, Lundgren, 2009, Ruijs, 2009, You and Lim, 2013, all of them have been estimated using frequentist approaches without consideration of uncertainty due to parameter estimates. From a theoretical standpoint, the main consideration for adopting the Bayesian approach is that it allows us to establish a statistical framework that simultaneously unifies decision theory, statistical inference, and probability theory under a single philosophically and mathematically consistent structure.…”