Data and Code for: Do Consumers Distinguish Fixed Cost from Variable Cost? “Schmeduling” in Two-Part Tariffs in Energy

A central assumption in economics is that consumers properly distinguish fixed cost from vari- able cost. This assumption is fundamental to various economic theories, including optimal taxation, redistribution, and price discrimination. Using a quasi-experiment in heating price reform in China, we find empirical evidence that is inconsistent with this conventional assump- tion, and more consistent with the “schmeduling” model in Liebman and Zeckhauser (2004). As we demonstrate its policy implications for two-part energy tariffs, this schmeduling behavior makes fixed costs directly relevant to the perceived relative prices of goods, and therefore alters the welfare implications of price, tax, and subsidy designs.