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This article is concerned with the endogeneity of air conditioning appliance ownership in the consumption of electricity by time of day (TOD). Both TOD consumption and air conditioning appliance ownership depend on temperature level and on household responsiveness to temperature variation, as well as on other measured household characteristics. The article presents an appropriate econometric methodology and applies it to obtain estimates and perform tests based on data from Southern California Edison's Residential TOD Pricing Experiment. The authors emphasize the implications for estimated consumption price elasticities.
Lillard et al. (Sun,) studied this question.