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Engel curves, household characteristics and low-user tariff schemes in natural gas

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  • Navajas, Fernando H.
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    Abstract

    We explore the relative importance of income and household characteristics (such as family size) in explaining differences in household consumption of natural gas and LPG. In a simple model of vertically (willingness to pay) ordered households we posit that the relative importance of the income elasticity of demand (vs. the family size elasticity) depends positively on the price faced by households. Thus, very low prices tend to depress the across households income elasticity of demand relative to the characteristic-elasticity and the opposite holds for under high prices. We test this hypothesis using, for the first time in Argentina, data from the household expenditure survey on Natural gas and LPG and compare the cross-consumption equations for both fuels, which have quite different price regimes. Finally, we explore welfare implications for low-user tariff scheme reforms in natural gas.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 31 (2009)
    Issue (Month): 1 (January)
    Pages: 162-168

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    Handle: RePEc:eee:eneeco:v:31:y:2009:i:1:p:162-168

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    Web page: http://www.elsevier.com/locate/eneco

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    Keywords: Engel curves Natural gas consumption Social tariffs;

    References

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    1. Phlips,Louis, 1983. "The Economics of Price Discrimination," Cambridge Books, Cambridge University Press, number 9780521283946, October.
    2. Berkhout, Peter H. G. & Ferrer-i-Carbonell, Ada & Muskens, Jos C., 2004. "The ex post impact of an energy tax on household energy demand," Energy Economics, Elsevier, vol. 26(3), pages 297-317, May.
    3. Navajas, Fernando H., 2008. "Infrastructure integration and incomplete contracts: natural gas in the Southern Cone," MPRA Paper 31025, University Library of Munich, Germany.
    4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    5. Fernando H. Navajas, 2006. "Estructuras Tarifarias Bajo Stress," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0(1-2), pages 77-102, January-D.
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    Cited by:
    1. Mariana Marchionni & Walter Sosa-Escudero & Javier Alejo, 2008. "La Incidencia Distributiva del Acceso, Gasto y Consumo de los Servicios Públicos," CEDLAS, Working Papers 0067, CEDLAS, Universidad Nacional de La Plata.
    2. Arturo Vásquez & Raúl García & Edwin Quintanilla & Julio Salvador & David Orosco, 2012. "Acceso a la Energía en el Perú : Algunas Opciones de Política," Working Papers 29, OSINERGMIN, Oficina de Estudios Economicos.
    3. Arbues, Fernando & Villanu´a, Inmaculada & Barberan, Ramon, 2010. "Household size and residential water demand: an empirical approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), March.
    4. Ariel Casarin, 2014. "Regulated price reforms and unregulated substitutes: the case of residential piped gas in Argentina," Journal of Regulatory Economics, Springer, vol. 45(1), pages 34-56, February.
    5. Cont, Walter & Hancevic, Pedro & Navajas, Fernando H., 2011. "Energy populism and household welfare," MPRA Paper 35725, University Library of Munich, Germany.
    6. Navajas, Fernando H. & Panadeiros, Monica & Natale, Oscar, 2011. "Environmentally Related Energy Taxes in Argentina, Bolivia and Uruguay," MPRA Paper 37829, University Library of Munich, Germany.

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