Bayesian Analysis of Demand Elasticity in the Italian Electricity Market

Sustainability

Maria Chiara D𠆞rrico¹  Carlo Andrea Bollino²  Francesco Asdrubali²  Pietro Buzzini² 

[1] Economics Department, University of Perugia, Via A. Pascoli 20, 06123 Perugia, Italy; E-Mail

关键词: demand elasticity;    Bayesian estimation;    electricity markets;   

DOI  :  10.3390/su70912127

来源: mdpi

【 摘 要 】

The liberalization of the Italian electricity market is a decade old. Within these last ten years, the supply side has been extensively analyzed, but not the demand side. The aim of this paper is to provide a new method for estimation of the demand elasticity, based on Bayesian methods applied to the Italian electricity market. We used individual demand bids data in the day-ahead market in the Italian Power Exchange (IPEX), for 2011, in order to construct an aggregate demand function at the hourly level. We took into account the existence of both elastic and inelastic bidders on the demand side. The empirical results show that elasticity varies significantly during the day and across periods of the year. In addition, the elasticity hourly distribution is clearly skewed and more so in the daily hours. The Bayesian method is a useful tool for policy-making, insofar as the regulator can start with a priori historical information on market behavior and estimate actual market outcomes in response to new policy actions.

【 授权许可】

CC BY   
© 2015 by the authors; licensee MDPI, Basel, Switzerland.