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Analysis and Study on the Electricity Price Elasticity of Demand and Price Formation Mechanism

Author: LiYan
Tutor: HeYongXiu
School: North China Electric Power University (Beijing)
Course: Technology Economics and Management
Keywords: electricity tariff demand elasticity granger causality test panel data model price formation mechanism
CLC: F407.61
Type: Master's thesis
Year: 2010
Downloads: 282
Quote: 1
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Abstract


This paper studied the price elasticity of each kind of user systematically based on double-logarithmic regression estimation model, Granger Causality Test Model (GCTM) and Panel Date Model (PDM), selecting electricity price, economic development level, and alternative energy prices etc. as factors. According to comparative analysis of the price elasticity in our country and other countries for all kinds of users, we get a conclusion that residential customers’electricity demand in China lacks of price elasticity, while the change of industrial and commercial price mechanism can have a significant impact on their electricity demand. This research developed different price mechanisms for different users based on their sensitivities to price changing. Researching on the price formation mechanism based on price elasticity can promote users to adjust the time and load of power use initiatively to achieve peak load shifting, while promoting user’s fair burden, and actively guiding customers to conserve electricity, encouraging energy saving and environment protecting, and providing a basis for scientific and rational sales price policy.

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CLC: > Economic > Industrial economy > Industrial economic theory > Industrial sector economy > Electrical and electronics industry > Electricity, motor industry
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