Abstract
Using a set of unbalanced panel data for Chinese׳s cities during the period of 2006–2009, this study aims to estimate the price and income elasticities of residential demand for natural gas. Natural gas consumption is specified as a function of its own price; substitute prices; urban wages; and other supply, climate, and housing characteristics. Using a feasible generalised least squares (FGLS) technique, which controls for panel heteroskedasticity and panel correlation, we find that natural gas consumption is price elastic and income inelastic when other covariates (e.g., the supply of natural gas pipeline and heating degree days) are controlled. In addition, there are large variations in demand behaviours across China׳s regions. There is a substantial income effect on demand for natural gas in southern China, whereas the northern regions are found to have a higher price effect. In addition, the substitution effect between coal and natural gas is significant in North China but is not significant in South China. These findings have several important policy implications for natural gas pricing and supply cost analysis in the context of China.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
