Results
Title

RESIDENTIAL DEMAND FOR ELECTRIC ENERGY.

Authors

Halvorsen, Robert

Abstract

A serious impediment to the design of appropriate public policies with regard to the energy crisis is the lack of general agreement concerning the determinants of energy demand. This article considers the determinants of residential demand for electric energy. The results indicate that the long-run own-price elasticity of demand is equal to at least unity, contrary to the common assumption that demand is not responsive to price. One method used is to derive the elasticities of demand for a model incorporating marginal price from demand and price equations estimated using data for average price. When both the demand and price equations are log-linear, as is the case here, the elasticities of demand estimated with average price data are equal to those that would be obtained with marginal price. A model has been developed that permits consistent estimation of direct and total elasticities of demand for residential electricity. The estimated direct elasticities are robust and indicate that the long-run direct elasticity of demand with respect to electricity price is at least unitary. The cross-elasticity of demand with respect to gas price is significant but small. The total income elasticity of expenditure on electricity is less than one.

Subjects

ELASTICITY (Economics); POLITICAL planning; ECONOMICS; FORCE & energy; ELECTRICITY; PRICES; ECONOMIC demand

Publication

Review of Economics & Statistics, 1975, Vol 57, Issue 1, p12

ISSN

0034-6535

Publication type

Academic Journal

DOI

10.2307/1937858