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The Welfare Impact of Rising Block Pricing: Electricity in Colombia

In Medellin, Colombia, electricity prices follow an unusual system of rising block prices. The stated objective of the policy is to redistribute income. In this paper we calculate the degree of redistribution achieved relative to that of a horizontal price schedule. We also calculate the efficiency cost of discrimination. The data come from a survey of over 1000 residential users of electricity.

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Energy Specializations: Electricity – Markets and Prices ; Energy Access – Energy Poverty and Equity

JEL Codes:
D42 - Market Structure, Pricing, and Design: Monopoly
Q56 - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

Keywords: Electricity pricing, Welfare, Colombia, Energy poverty

DOI: 10.5547/ISSN0195-6574-EJ-Vol12-No4-4

Published in Volume 12, Number 4 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.