GENERALIZED MIXED ESTIMATION OF A MULTINOMIAL DISCRETECONTINUOUS CHOICE MODEL FOR ELECTRICITY DEMAND

Pene Kalulumia () and Denis Bolduc ()
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Pene Kalulumia: Département d'économique, Université de Sherbrooke

Cahiers de recherche from Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke

Abstract: In this paper, we applied the generalized mixed estimation approach to the problem of estimating the Quebec residential electricity demand for space and water heating. A multinomial discrete-continuous choice model is used and estimated in two stages. The discrete choice is modelled as a multinomial probit model, while the continuous choice is estimated from a reduced form approach which corrects for the simultaneity biases. The results indicate that the GM estimator which combines prior and sample information dominates the classical ML estimator of the MNP models and hence, provides better prevision for electricity consumption. Evidence also shows that heating-system capital and operating costs, households characteristics, and energy prices have a significant impact on the choice of heating systems and electricity use. In particular, price substitution effects are well predicted.

Keywords: Generalized mixed estimator; residential electricity demand; multinomial probit; discretecontinuous choice. (search for similar items in EconPapers)
JEL-codes: C C13 C51 D12 Q41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm and nep-ene
Date: 2004
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Persistent link: http://EconPapers.repec.org/RePEc:shr:wpaper:04-01

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