ELECTRICITY DEMAND BY TIME-OF-USE - AN APPLICATION OF THE HOUSEHOLD AIDS MODEL

In this study, we estimated the price and expenditure elasticities of peak and off-peak electricity consumption using a micro data set on 22 0 households living in 19 Swiss cities. The household version of the a lmost ideal demand system model (AIDS) was used as a framework. To inc orporate household characteristics, the AIDS model was expanded by spe cifying the intercept as a linear function of household characteristic s variables. Results indicate that demand for peak and off-peak electr icity is elastic, and that cross-price effects are positive as well as the elasticity of substitution. Therefore, peak and off-peak electric ity are substitutes in the Hicks-Alien sense.