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 1) theory does not provide an exclusion restriction between the participation and consumption equations, or 2) the demand system contains a large number of parameters estimated from a difficult objective function. We find that correcting for selection bias is important. Generally, small commercial establishments are not very responsive to time-of-use pricing. However, for some subgroups (such as those with neither electric heating nor air conditioning), significant responsiveness occurs given a sufficiently short peak period and a sufficiently large peak/off-peak price differential