We analyse time-varying tolling in the stochastic bottleneck model with price-sensitive demand and uncertain capacity. We find that price sensitivity and its interplay with uncertainty have important implications for the effects of tolling on travel costs, welfare and consumers. We evaluate...

The marginal cost of electricity fluctuates hour-by-hour, yet retail customers typically face flat prices. Using data from all seven US wholesale markets and a new method to evaluate alternative rates set in advance that accounts for equilibrium price effects, we estimate efficiency gains...

Much of energy economics curricula involves the study of techno-economic aspects of energy systems with an increasing focus devoted to fostering an understanding of the interactions between innovative technologies and adaptive markets. As the interplay of these dynamics and their impacts on...

This study investigates airport congestion pricing and capacity investment with cost recovery consideration. Two countries’ airports are interlinked and served by each country’s home carrier. Our global welfare maximization shows that when per-passenger subsidies are not feasible under...

We consider an economy in which competitive firms use three technologies for electricity production: pollutive fossils, intermittent renewables whose availability varies continuously over time, and storage. A Pigouvian tax implements the first-best solution. This is also the case for an...

We consider an economy in which competitive firms use three technologies for electricity production: pollutive fossils, intermittent renewables like wind or solar, and storage. We determine optimal subsidies for renewables and storage capacities when carbon pricing is imperfect. This policy is...

This work puts forward a demand response model based on both prices and incentives, which strengthens the accuracy of the demand response approach influencing the reduction or increase of the customer demand. This possibility arises from offering customers real-time and time-of-use pricing if...

Abstract This is the fifth in a series of teaching notes on quality-differentiated demand. With an eye on accessibility to undergraduate econ majors, the focus here is on peak-load pricing and highway tolls. Once quality considerations are accounted for, a richer set of insights is derived to...

A.A. Walters derived a traffic flow function, and advocated toll to cure congestion. He wanted to save lives and monies, time is money, in congestion. NYC and Hong Kong have been practicing his policy for years, but surviving drivers are still tortured by congestion. Walters’ intention is...

Electric Vehicles (EV) present a unique challenge to electric power system (EPS) operations because of the potential magnitude and timing of load increases due to EV charging. Time-of-Use (TOU) electricity pricing is an established way to reduce peak system loads. It is effective at shifting the...

In the face of capacity disruptions (due, for example, to traffic incidents or poor weather), information provision and congestion pricing are alternative alleviating policies. A state-dependent toll equals the state-dependent marginal external cost (MEC), which is higher if traffic condition is...

Solar and wind power are now cheaper than fossil fuels but are intermittent. The extra supply-side variability implies growing benefits of using real-time retail pricing (RTP). We evaluate the potential gains of RTP using a model that jointly solves investment, supply, storage, and demand to...

New York State policies impose time bound targets for both progressively larger emissions reductions and increasing fractions of zero-carbon electricity. This paper compares pathways to meet desired emissions reduction goals with or without specified zero-carbon electricity targets. We show that...

We examine heterogeneity in Norwegian households' price responses to critical peak pricing (CPP) on electricity consumption, using a large-scale randomized controlled trial (RCT), high-frequency electricity data, and default enrollment. Increasing the grid transmission charge by 4,067%...

We examine heterogeneity in Norwegian households' price responses to critical peak pricing (CPP) on electricity consumption, using a large-scale randomized controlled trial (RCT), high-frequency electricity data, and default enrollment. Increasing the grid transmission charge by 4,067%...

We extend the theory of peak-load pricing by considering that the production with different technologies can be adjusted within their capacity at different speeds. In the established analysis, all production decisions can be made after the random variables realize. In our setting, in contrast,...

Most electricity systems face contractual fixed consumer prices in the short term, that is, load and price are fixed before the random supply of renewables like wind or solar realizes. Steam power plants also make production decisions before such a random supply realizes. These capacities cannot...

We consider an economy in which competitive firms use three technologies for electricity production: pollutive fossils, intermittent renewables like wind or solar, and storage. We determine optimal subsidies for renewables and storage capacities when carbon pricing is imperfect. This policy is...

Prosumers are becoming increasingly important in global energy consumption and production. We partner with an energy service provider in Sweden to explore the economics facing such agents by conducting a natural field experiment over a 32-month period. As a policy instrument, we explore how...

The growth of electric vehicles (EVs) raises new challenges for electricity systems. We implement a field experiment to assess the effect of time-of-use (TOU) pricing and managed charging on EV charging behavior. We find that while TOU pricing is effective at shifting EV charging into off-peak...

The current paper illustrates the use of principal component analysis (PCA) on the congestion component of local (i.e. zonal) electricity price data to detect the most salient congestion patterns in electricity transmission grids managed by either a Regional Transmission Organization (RTO) or an...

Driving demand and congestion are known to peak throughout the day, but temporal heterogeneity in travel demand elasticities is often overlooked. I estimate how the fuel economy elasticity of travel demand — a measure of the rebound effect from fuel economy standards — varies across peak and...

Bundle pricing is commonly adopted by service firms managing multiple congestion-prone service facilities. Under bundle pricing, the firm charges a single price for all the services as a whole, and customers either purchase the bundle or do not purchase at all. This scheme is in contrast to à...

There are constraints on pricing congestible facilities. First, if heterogeneous users are observationally indistinguishable, then congestion charges must be anonymous. Second, the time variation of congestion charges may be constrained. Do these constraints undermine the feasibility of marginal...

The disconnect between price variability of wholesale electricity sales and the uniformity of the retail prices observed by most consumers results in well documented inefficiencies. Time-of-use (“TOU”) electricity tariffs offer a middle-ground between dynamic wholesale prices and flat retail...

Electricity cannot be cost-effectively stored even for short periods of time. Consequently, wholesale electricity prices vary widely across hours of the day with peak prices frequently exceeding off-peak prices by a factor of ten or more. Most analyses of energy-efficiency policies ignore this...

The penetration of distributed generation, energy storages and smart loads has resulted in the emergence of prosumers: entities capable of adjusting their electricity production and consumption in order to meet environmental goals and to participate profitably in the available electricity...

With the ongoing rollout of smart meters in Ireland, time-of-use (ToU) tariffs are currently being introduced as a new way to pay for electricity. Such tariffs can bring important benefits to both consumers and society, in terms of reduced electricity bills and CO2 emissions, respectively. At...