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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 the period 1998–2012. We find evidence 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 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. Our estimates suggest that 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?," Working Papers 249510, Australian National University, Centre for Climate Economics & Policy.
  • Handle: RePEc:ags:ancewp:249510
    DOI: 10.22004/ag.econ.249510
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    Keywords

    Demand and Price Analysis; Resource /Energy Economics and Policy;

    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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