TIME-OF-USE PRICES AND ELECTRICITY DEMAND - ALLOWING FOR SELECTION BIAS IN EXPERIMENTAL-DATA

We address self-selection in time-of-use experiments. Our methodology is especially appropriate when (i) theory does not provide an exclusio n restriction between the participation and consumption equations or ( ii) the demand system contains a large number of parameters estimated from a difficult objective function. We find that correcting for selec tion bias is important. Generally, small commercial establishments are not very responsive to time-of-use pricing, However, for some subgrou ps (such as those with neither electric heating nor air conditioning), significant responsiveness occurs given a sufficiently short peak per iod and a sufficiently large peak/off-peak price differential.