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The demand for coal among China's rural households: Estimates of price and income elasticities

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  • Teng, Meixuan
  • Burke, Paul J.
  • Liao, Hua

Abstract

China's residential sector has experienced rapid electrification and gasification. Among rural households, however, coal still accounts for a large share of energy use, especially in the north. Use of coal for cooking and heating brings large health and pollution risks. From a theoretical viewpoint, economic tools such as taxes and subsidies have the potential to play a crucial role in addressing this issue. In this paper, a provincial-level dataset is used to estimate the price and income elasticities of aggregate coal demand by rural households. We find that coal is a non-Giffen inferior good for the rural household sector. This means that future income growth may help to induce switching from coal. Demand is becoming more price elastic as rural incomes grow. We also find that rural residential coal demand is more price- and income-responsive in the south than the north, perhaps because of fewer substitution options in the north. Our results provide benchmarks and parameters for policy simulation research.

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  • Teng, Meixuan & Burke, Paul J. & Liao, Hua, 2019. "The demand for coal among China's rural households: Estimates of price and income elasticities," Energy Economics, Elsevier, vol. 80(C), pages 928-936.
    • Handle: RePEc:eee:eneeco:v:80:y:2019:i:c:p:928-936
    DOI: 10.1016/j.eneco.2019.03.005
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    7. Huntington, Hillard G. & Barrios, James J. & Arora, Vipin, 2019. "Review of key international demand elasticities for major industrializing economies," Energy Policy, Elsevier, vol. 133(C).
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    9. Mengshu, Shi & Yuansheng, Huang & Xiaofeng, Xu & Dunnan, Liu, 2021. "China's coal consumption forecasting using adaptive differential evolution algorithm and support vector machine," Resources Policy, Elsevier, vol. 74(C).
    10. Qiao, Hui & Chen, Siyu & Dong, Xiucheng & Dong, Kangyin, 2019. "Has China's coal consumption actually reached its peak? National and regional analysis considering cross-sectional dependence and heterogeneity," Energy Economics, Elsevier, vol. 84(C).
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    13. Zhu, Lin & Liao, Hua & Burke, Paul J., 2023. "Household fuel transitions have substantially contributed to child mortality reductions in China," World Development, Elsevier, vol. 164(C).

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    More about this item

    Keywords

    Coal demand; Price elasticity; Income elasticity; China; Rural household;
    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
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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