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Dynamic demand for residential electricity in Taiwan under seasonality and increasing-block pricing

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  • Hung, Ming-Feng
  • Huang, Tai-Hsin

Abstract

This paper studies the dynamic demand for residential electricity in Taiwan employing a monthly panel data set, composed of 19 counties and spanning the period from 2007:01 to 2013:12. The partial adjustment model used addresses the endogeneity of the electricity price that results from the increasing-block pricing. The estimated results show that there is a significant seasonal difference in the demand for electricity between the summer and non-summer periods. Both the adjustment speed and own price elasticity during the summer months are found to be lower than those in the non-summer months due to the hot weather in summer. It is easier for consumers to adjust their electricity consumption in response to the changes in electricity pricing during the non-summer time. The estimated inelastic short-run and long-run income effects show that electricity is a necessity for consumers. Moreover, the controversial electricity-conservation policies are found to be ineffective measures for reducing electricity consumption in Taiwan.

Suggested Citation

  • Hung, Ming-Feng & Huang, Tai-Hsin, 2015. "Dynamic demand for residential electricity in Taiwan under seasonality and increasing-block pricing," Energy Economics, Elsevier, vol. 48(C), pages 168-177.
    • Handle: RePEc:eee:eneeco:v:48:y:2015:i:c:p:168-177
    DOI: 10.1016/j.eneco.2015.01.010
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    More about this item

    Keywords

    Residential electricity demand; Increasing-block pricing; Seasonality; Partial adjustment model; Price elasticity; Income effects;
    All these keywords.

    JEL classification:

    • D - Microeconomics
    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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