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Regional electric power demand elasticities of Japan's industrial and commercial sectors

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  • Hosoe, Nobuhiro
  • Akiyama, Shu-ichi

Abstract

In the assessment and review of regulatory reforms in the electric power market, price elasticity is one of the most important parameters that characterize the market. However, price elasticity has seldom been estimated in Japan; instead, it has been assumed to be as small as 0.1 or 0 without proper examination of the empirical validity of such a priori assumptions. We estimated the regional power demand functions for nine regions, in order to quantify the elasticity, and found the short-run price elasticity to be 0.09-0.30 and the long-run price elasticity to be 0.12-0.56. Inter-regional comparison of our estimation results suggests that price elasticity in rural regions is larger than that in urban regions. Popular assumptions of small elasticity of 0.1, for example, could be suitable for examining Japan's aggregate power demand but not power demand functions that focus on respective regions. Furthermore, assumptions about smaller elasticity values such as 0.01 and 0 could not be supported statistically by this study.

Suggested Citation

  • Hosoe, Nobuhiro & Akiyama, Shu-ichi, 2009. "Regional electric power demand elasticities of Japan's industrial and commercial sectors," Energy Policy, Elsevier, vol. 37(11), pages 4313-4319, November.
  • Handle: RePEc:eee:enepol:v:37:y:2009:i:11:p:4313-4319
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Akihiro Otsuka, 2015. "Demand for industrial and commercial electricity: evidence from Japan," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-11, December.
    2. repec:eee:enepol:v:106:y:2017:i:c:p:233-243 is not listed on IDEAS
    3. Youngho Chang & Yanfei Li, . "An Integrated Asian Natural Gas Market: Potentials and Policy Implications," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
    4. Daniel de Abreu Pereira Uhr & Júlia Gallego Ziero Uhr, André Luis Squarize Chagas, 2017. "Estimation of price and income elasticities for the Brazilian household electricity demand," Working Papers, Department of Economics 2017_12, University of São Paulo (FEA-USP).
    5. Knaut, Andreas & Paulus, Simon, 2016. "When are consumers responding to electricity prices? An hourly pattern of demand elasticity," EWI Working Papers 2016-7, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI), revised 16 Mar 2017.
    6. Nobuhiro Hosoe, 2012. "Nuclear Power Plants Shutdown and Alternative Power Plants Installation–A Nine-region Spatial Equilibrium Analysis for the Electric Power Market in Japan," GRIPS Discussion Papers 12-11, National Graduate Institute for Policy Studies.
    7. Spandagos, Constantinos & Ng, Tze Ling, 2017. "Equivalent full-load hours for assessing climate change impact on building cooling and heating energy consumption in large Asian cities," Applied Energy, Elsevier, vol. 189(C), pages 352-368.
    8. Heshmati, Almas, 2012. "Survey of Models on Demand, Customer Base-Line and Demand Response and Their Relationships in the Power Market," IZA Discussion Papers 6637, Institute for the Study of Labor (IZA).
    9. Hosoe, Nobuhiro, 2015. "Nuclear power plant shutdown and alternative power plant installation scenarios – A nine-region spatial equilibrium analysis of the electric power market in Japan," Energy Policy, Elsevier, vol. 86(C), pages 416-432.
    10. He, Y.X. & Yang, L.F. & He, H.Y. & Luo, T. & Wang, Y.J., 2011. "Electricity demand price elasticity in China based on computable general equilibrium model analysis," Energy, Elsevier, vol. 36(2), pages 1115-1123.
    11. Miller, Mark & Alberini, Anna, 2016. "Sensitivity of price elasticity of demand to aggregation, unobserved heterogeneity, price trends, and price endogeneity: Evidence from U.S. Data," Energy Policy, Elsevier, vol. 97(C), pages 235-249.

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