Designing Pareto-superior demand-response rate options

I. Horowitz, Chi-Keung WOO*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

33 Citations (Scopus)


We explore three voluntary service options - real-time pricing, time-of-use pricing, and curtailable/interruptible service - that a local distribution company might offer its customers in order to encourage them to alter their electricity usage in response to changes in the electricity-spot-market price. These options are simple and practical, and make minimal information demands. We show that each of the options is Pareto-superior ex ante, in that it benefits both the participants and the company offering it, while not affecting the non-participants. The options are shown to be Pareto-superior ex post as well, except under certain exceptional circumstances.

Original languageEnglish
Pages (from-to)1040-1051
Number of pages12
Issue number6-7
Publication statusPublished - 2006

Scopus Subject Areas

  • Civil and Structural Engineering
  • Building and Construction
  • Pollution
  • Mechanical Engineering
  • Industrial and Manufacturing Engineering
  • Electrical and Electronic Engineering


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