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How do Consumers Respond to Gasoline Price Cycles?

David P. Byrne, Gordon W. Leslie, and Roger Ware

Year: 2015
Volume: Volume 36
Number: Number 1
DOI: 10.5547/01956574.36.1.5
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Abstract:
This paper empirically studies how consumers respond to retail gasoline price cycles. Our analysis uses new station-level price data from local markets in Ontario, Canada, and a unique market-level measure of consumer responsiveness based on web traffic from gasoline price reporting websites. We first document how stations use coordinated pricing strategies that give rise to large daily changes in price levels and dispersion in cycling gasoline markets. We then show consumer responsiveness exhibits cycles that move with these price fluctuations. Through a series of tests we find that forward-looking stockpiling behavior by consumers plays a central role in generating these patterns.



An Experimental Study of Monthly Electricity Demand (In)elasticity

David P. Byrne, Andrea La Nauze, and Leslie A. Martin

Year: 2021
Volume: Volume 42
Number: Number 2
DOI: 10.5547/01956574.42.2.dbyr
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Abstract:
We document substantial rigidity in household electricity demand in response to large price shocks. We partnered with an electricity retailer to run a field experiment in which randomly-selected households received discounts of up to 50% on their total electricity bill or up to 95% off their per unit cost of electricity for a full month. We show that the quantity of electricity consumed was unaffected by these discounts. Exploiting rich billing, smart meter, and survey data, we document responses that are much more inelastic than previously observed in scenarios that raise prices for a few hours or raise or lower prices for indefinitely-long periods of time. Our results hold even among subgroups that we ex-ante believed were most likely to respond.





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