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A Partial Adjustment Model of U.S. Electricity Demand by Region, Season, and Sector

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  • Paul, Anthony

    () (Resources for the Future)

  • Myers, Erica

    () (Resources for the Future)

  • Palmer, Karen

    () (Resources for the Future)

Abstract

Identifying the factors that influence electricity demand in the continental United States and mathematically characterizing them are important for developing electricity consumption projections. The price elasticity of demand is especially important, since the electricity price effects of policy implementation can be substantial and the demand response to policy-induced changes in prices can significantly affect the cost of policy compliance. This paper estimates electricity demand functions with particular attention paid to the demand stickiness that is imposed by the capital-intensive nature of electricity consumption and to regional, seasonal, and sectoral variation. The analysis uses a partial adjustment model of electricity demand that is estimated in a fixed-effects OLS framework. This model formulation allows for the price elasticity to be expressed in both its short-run and long-run forms. Price elasticities are found to be broadly consistent with the existing literature, but with important regional, seasonal, and sectoral differences.

Suggested Citation

  • Paul, Anthony & Myers, Erica & Palmer, Karen, 2009. "A Partial Adjustment Model of U.S. Electricity Demand by Region, Season, and Sector," Discussion Papers dp-08-50, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-08-50
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    References listed on IDEAS

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    More about this item

    Keywords

    electricity; demand elasticities; energy demand; partial adjustment;

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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