CERE Working Papers, CERE - the Center for Environmental and Resource Economics
Chandra Kiran B Krishnamurthy
A cross-country analysis of residential electricity demand in 11 OECD-countries
() and Bengt Kriström
Abstract: We provide consistent, cross-country estimates of price
and income elasticity for the residential sector of 11 OECD countries.
Using survey data from 2011 on annual consumption of electricity and
sample-derived average electricity price, we provide country-specific price
elasticity estimates and average income elasticity estimates. For most
countries in our sample, we find strong price responsiveness, with
elasticities varying between -0:27 for South Korea and -1:4 for Australia,
with most countries elasticity being above (in absolute value) -0:5.
Exploiting the presence of many attitudinal indicators, we find evidence
for non-price related factors, in particular households’self-reported
energy saving behavior, to reduce energy demand between 2 and 4%. In
contrast, we find very weak income response, with income elasticities
varying from 0:07 to 0:14 and no evidence for heterogeneity across the
countries in our sample. Our results regarding price elasticity are in
contrast with many existing studies which find low-to-moderate price
responsiveness, and adds to a few recent studies indicating more policy
space for demand reduction than previously thought.
Keywords: Residential Electricity Demand; Price Elasticity; (follow links to similar papers)
JEL-Codes: D12; Q41; (follow links to similar papers)
30 pages, August 14, 2013, Revised June 30, 2014
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