Demand (Economic theory), Energy consumption, Elasticity (Economics), Supply & demand, Economics, Customer satisfaction, Prices, Electricity, and Surveys
The purpose of this paper is to analyze the short-run residential demand for electricity, where the short run is defined as the period within which a household's stock of electrical appliances and demographic profile is fixed. Authors have developed a model of short run electricity demand which incorporates this fixed configuration and explicitly treats the multi-level nature of electricity rate structures. The existence of the multilevel structure implies that the budget constraint is non-linear and that price and quantity are simultaneously determined. They have estimated the short-run demand parameters using individual household data from a large subset of the 1972-73 Consumer Expenditure Survey sample combined with specific rate schedule information obtained from the Federal Energy Regulatory Commission. This paper contributes to the analysis of electricity demand in several ways. First, the study is the only attempt to analyze micro data which combines specific rate information, a broad geographic focus and substantial sample variation in the important determinants of electricity demand. Second, authors have analyzed not only total electricity consumption, but also the distribution of consumption over various end-use categories such as heating or cooling.
Elasticity (Economics), Economics, Prices, Demand (Economic theory), Political planning, Force & energy, and Electricity
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.