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An Assessment of Energy Consumption and Price Responsiveness: Evidence from Dominican Republic

Author

Listed:
  • Jose Antonio Hernandez

    (School of Economics, Wuhan University of Technology, Wuhan, P.R. China)

  • Camilo Koch

    (School of Management, Wuhan University of Technology, Wuhan, P.R. China)

Abstract

Electricity has a high impact in the activities and sectors of any economy. A considerable amount of studies relates the importance of electricity to economic growth of nations. Dominican Republic, though, has been in a process of energy reform, has not yet developed a stable electric delivering. This study is firstly conducted to ensure an overview of the electricity sector of Dominican Republic, describing the energy mix, national electricity situation, and main concerns on the sector reform that have been in process including other Latin American countries. Secondly, the paper aims to determine the elasticity of demand on energy generation sector through log linear regression method; analyzing the variation of price and quantity of demand interaction. Related researches concerning elasticity of demand in other countries such as Australia, Israel, China and United States, shows close similarity to our result, where elasticity tends to be inelastic (0.57) but not perfectly inelastic to variation on price. While the energy market structures by sectors may be complex, customers’ response to pricing signals can promote efficient investment in the long-run term, help mitigate short-run market power by generators and transmission owners, reduce price spikes, low price volatility, and consequently support price mechanism.

Suggested Citation

  • Jose Antonio Hernandez & Camilo Koch, 2015. "An Assessment of Energy Consumption and Price Responsiveness: Evidence from Dominican Republic," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 1(6), pages 81-87, May.
    • Handle: RePEc:mgs:ijmsba:v:1:y:2015:i:6:p:81-87
    DOI: 10.18775/ijmsba.1849-5664-5419.2014.16.1007
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    References listed on IDEAS

    as
    1. Fan, Shu & Hyndman, Rob J., 2011. "The price elasticity of electricity demand in South Australia," Energy Policy, Elsevier, vol. 39(6), pages 3709-3719, June.
    2. World Bank, 2006. "World Development Indicators 2006," World Bank Publications - Books, The World Bank Group, number 8151, December.
    3. Jamil, Faisal & Ahmad, Eatzaz, 2011. "Income and price elasticities of electricity demand: Aggregate and sector-wise analyses," Energy Policy, Elsevier, vol. 39(9), pages 5519-5527, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Electricity Responsiveness; Price Elasticity of Demand; Energy Price Mechanism; Energy Consumption;
    All these keywords.

    JEL classification:

    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General

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