Analyzing Small Industrial and Commercial User Demand for Electricity

Keighton R. Allen and Thomas Fullerton ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study employs duality theory to develop a theoretical model for small commercial and industrial (CIS) electricity usage. The CIS production function is posited such that output is a function of three variable inputs (electricity, natural gas, and labor) and one fixed input (capital). A profit function dual to this production function is specified using a normalized quadratic functional form. CIS profits are functionally dependent upon output price, an electricity input price, and natural gas and labor input prices for a fixed quantity of capital. The derived input-demand equation results from differentiating the profit function with respect to the price of electricity. The input-demand equation for electricity is dependent upon the own-price of electricity, the CIS output price, and input cross-prices. The model may be of use to utilities and regulators for the analysis of CIS electricity usage.

Keywords: Duality Theory; Derived Demand; Electricity; Small Industrial and Commercial Customers (search for similar items in EconPapers)
JEL-codes: M21 Q47 R15 (search for similar items in EconPapers)
Date: 2018-09-15, Revised 2018-10-22
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Theoretical Economics Letters 14.8(2018): pp. 3109-3115

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:98988

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