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A cross-country analysis of residential electricity demand in 11 OECD-countries
Umeå University, Faculty of Social Sciences, Center for Environmental and Resource Economics (CERE). Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.ORCID iD: 0000-0002-9494-6467
SLU Umeå.
2015 (English)In: Resources and Energy Economics, ISSN 0928-7655, Vol. 39, 68-88 p.Article in journal (Refereed) Published
Abstract [en]

We provide consistent, cross-country estimates of price and income elasticity for households in 11 OECD countries. Using survey data from 2011 on annual consumption of electricity and sample-derived average electricity price, we provide country-specific price elasticity estimates and average income elasticity estimates. For most countries in our sample, we find strong price responsiveness, with elasticities varying (in absolute value) between 0.27 for South Korea and 1.4 for Australia, and higher than 0.5 for most countries. Exploiting the presence of many attitudinal indicators in the dataset, we provide evidence that non-price related factors to affect energy demand; in particular, households' self-reported energy savings behaviour reduces demand between 2 and 4%. In contrast, we find very weak income responsiveness, with income elasticities varying from 0.07 to 0.16 and no evidence for heterogeneity across the countries in our sample. Our results regarding price elasticity are in contrast with those of many existing studies which find low-to-moderate price responsiveness, and adds to a few recent studies indicating more policy space for demand reduction than previously thought.

Place, publisher, year, edition, pages
2015. Vol. 39, 68-88 p.
Keyword [en]
Residential Electricity Demand, Price Elasticity
National Category
Economics and Business Economics
Research subject
URN: urn:nbn:se:umu:diva-96371DOI: 10.1016/j.reseneeco.2014.12.002ISI: 000349735400005OAI: diva2:764339
Available from: 2014-11-18 Created: 2014-11-18 Last updated: 2015-06-24Bibliographically approved

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B. Krishnamurthy, Chandra Kiran
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