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Is the price elasticity of demand for coal in China increasing?

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  • Burke, Paul J.
  • Liao, Hua

Abstract

China's dependence on coal is a major contributor to local and global environmental problems. In this paper we estimate the price elasticity of demand for coal in China using a panel of province-level data for 1998–2012. We find that provincial coal demand has become increasingly price elastic. As of 2012 we estimate that this elasticity was in the range −0.3 to −0.7 in point estimate terms when responses over two years are considered. The results imply that China's coal market is becoming more suited to price-based approaches to reducing emissions. The elimination of coal consumption subsidies could reduce national coal use and related emissions by around 2%.

Suggested Citation

  • Burke, Paul J. & Liao, Hua, 2015. "Is the price elasticity of demand for coal in China increasing?," China Economic Review, Elsevier, vol. 36(C), pages 309-322.
    • Handle: RePEc:eee:chieco:v:36:y:2015:i:c:p:309-322
    DOI: 10.1016/j.chieco.2015.10.004
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    More about this item

    Keywords

    Coal; Price elasticity; Demand; China; Provincial; Economic reform; Price reform;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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