Smart Power Limits: Designing Shortage Mechanisms for Extreme Events

Mar Reguant (The Institute for Economic Analysis), joint with Mayra Wagner

Monday 02 March 2026 12:00 - 13:30

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About this event

As shortages of resources like water and electricity due to extreme weather events become more frequent, high prices alone may fail to curb demand, making shortages more common. We examine a power limit policy for residential electricity households that rations electricity consumption rather than setting it to zero, as in a traditional rolling blackout. We find that power limits can provide equivalent savings to large blackouts, even when generous. Additionally, due to selection, power limits reduce the number of households affected by a shortage event. We conclude by discussing the welfare consequences of power limits and their heterogeneous impact across households.

Industrial Organisation seminars are held on Mondays in term time at 12:00-13:30, in person in SAL 2.04, unless specified otherwise.

Seminar organiser: Alessandro Gavazza.

For further information please contact Sadia Ali: s.ali43@lse.ac.uk.

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