Seminario de Investigación ECOBAS: Mar Reguant - Northwestern University (Ilinois) & Barcelona School of Economics
We study the distributional impacts of real-time pricing (RTP) in the Spanish electricity market, which rolled out RTP as the default tariff for a large share of residential customers. We complement aggregate patterns of distributional effects with a method to infer individual households' income using zip-code income distributions. We identify three channels for the distributional impacts of RTP: consumption patterns, appliance ownership, and location. The first channel makes the switch from monthly to hourly prices progressive since high-income households consume disproportionately more at peak times when real-time prices are higher. However, the other two channels make the switch from annual to monthly prices regressive: low-income households, who tend to have more electric heating, benefit from the price insurance provided by time-invariant prices during winter, when prices tend to be higher and more volatile. Given that prices differences are greater across months than within months, the regressive effect dominated. Using counterfactual experiments, we find that RTP makes low-income households particularly vulnerable to adverse weather shocks during winter. In the future, the wider adoption of enabling technologies (including storage and demand response devices) by the high-income groups might worsen the distributional impacts of RTP.
Seminario de Investigación ECOBAS: Francisco Gómez-Martínez - Norwegian Business School
Existing evidence demonstrates that the degree of social homogeneity in a society correlates with various economic indicators. Using experimental techniques, we establish the causal impact of social proximity on socially responsible behavior in markets and its implications for economic welfare.
We develop an experimental market where low-cost production generates a negative externality to a third party, while high-cost production eliminates the externality. We compare behavior in groups
varying whether the third party shares a common identity with buyers and sellers (in-group condition) or not (out-group condition). Our findings indicate that socially responsible behavior is generally robust
across our treatments. However, reducing social heterogeneities improves economic welfare indicators: market prices are significantly higher and the number of offers rejected by the buyers becomes significantly lower. This leads to a striking reduction of economic inequality and improvement of market efficiency. Overall, our experiment shows that the social structure of market environments matters a great deal and has significant implications for the design of institutions.
