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Fuel Demand Elasticities for Energy and Environmental Policies: Indian Sample Survey Evidence

Author

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  • Haripriya Gundimeda

    () (Madras School of Economics)

  • Atheendar Gunnar Köhlin

    () (Environmental Economics Unit, Department of Economics,Göteborg University.)

Abstract

India has been running large-scale interventions in the energy sector over the last decades. Still, there is a dearth of reliable and readily available price and income elasticities of demand to base these on, especially for domestic use of traditional fuels. This study uses the linear approximate almost ideal demand system (LA-AIDS) using micro data of more than 100,000 households sampled across India. The LA-AIDS model is expanded by specifying the intercept as a linear function of household characteristics. Marshallian and Hicksian price and expenditure elasticities of demand for four main fuels are estimated for both urban and rural areas by different income groups. These can be used to evaluate recent and current energy policies. The results can also be used for energy projections and carbon dioxide simulations given different growth rates for different segments of the Indian population.

Suggested Citation

  • Haripriya Gundimeda & Atheendar Gunnar Köhlin, 2006. "Fuel Demand Elasticities for Energy and Environmental Policies: Indian Sample Survey Evidence," Working Papers 2006-09, Madras School of Economics,Chennai,India.
  • Handle: RePEc:mad:wpaper:2006-09
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    More about this item

    Keywords

    LA-AIDS; fuel; India; income; price; elasticities; NSSO data;

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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