This study investigates structural heterogeneity in the price responsiveness of residential electricity demand between single-person and multi-person households in Korea. Using micro-data from the Household Income and Expenditure Survey (2019–2024) combined with KEPCO’s progressive tariff schedule, we applied the Two-Stage Least Squares (2SLS) method. This approach effectively controls for the endogeneity inherent in Increasing Block Tariffs (IBT) by incorporating marginal price and difference variables. The empirical results indicate that while residential electricity demand is generally price-inelastic, single-person households exhibit significantly lower elasticity (in absolute terms) than multi-person households. This rigidity is attributed to single-person households being concentrated in the lowest tariff block, which diminishes price sensitivity, and having a high proportion of base load from essential appliances. Consequently, this study suggests that future Demand Side Management (DSM) policies and tariff reforms must adopt a sophisticated approach that accounts for the distinct consumption characteristics and limited price responsiveness of single-person households in the era of demographic changes.
Choi et al. (Fri,) studied this question.
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