Abstract
This study examines the short- and long-run price and income elasticities of residential and industrial electricity demand in the European Union between 1996 and 2016. Instrumental variable models using the between estimator, as well as dynamic panel models are employed to present robust estimates, and to assess the impact of different methodologies on the reported elasticities. The long-run price elasticity of residential electricity consumption is estimated between −0.53 and −0.56. These elasticities are more inelastic than that of industrial electricity use, which is reported between −0.75 and −1.01. The choice of different econometric methodologies has only moderate impact on the estimates. While long-run residential income elasticity estimates are moderately inelastic and estimated around 0.61, industrial electricity use tends to be closely tied to income, with elasticities between 0.76 and 1.08. Electricity demand in all sectors is highly price and income inelastic in the short run. Additionally, population density, temperatures, and policy measures also influence sectoral electricity use. The above estimates can aid the design of European energy and environmental policy.
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.
