Reverse subsidy dilemma caused by the transformation from individual heating to central heating

Abstract

With the increase in household income enhancing people's expectations for life comfort, the demand for central heating in hot summer and cold winter areas (HSCWs) has increased. This study aims to explore whether it is appropriate to promote central heating in HSCWs from the perspectives of inequality and reverse subsidies. Reverse subsidy dilemma caused by the transformation from individual heating to central heating was proposed by the analysis relying on utility theory. This paper presents data suggesting that individual heating could provide more options for different household income groups than could central heating. Furthermore, the heating inequality among different income groups is assessed, and reverse subsidies from the poor to the rich are discussed. We find that the implementation of central heating leads to few adverse effects and high utility for the rich and increased expenditures and low utility satisfaction for the poor at the same price level.