Competing for (In)attention: Price Discrimination in Residential Electricity Markets

Дата публикации: 20-07-2026 00:00:00

This paper studies the causes and consequences of pricing heterogeneity in markets for residential electricity, a nearly homogeneous good. I uncover adverse efficiency and distributional impacts of competition when consumers face heterogeneous search frictions. I show that consumers pay different prices for electricity in the same market, with low-income households and marginalized communities paying systematically higher electricity prices than their higher-income counterparts. These pricing patterns are consistent with a model of firms price discriminating on search frictions through marketing. Using data from Baltimore, I estimate a structural model that shows that this marketing leads to an annual welfare loss of 14% of industry-wide variable costs. Despite having only slightly larger search frictions, low-income households pay substantially higher prices than high-income households primarily due to lower marketing costs in low-income communities. Auxiliary analyses rule out...

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