Heating system selection and energy price sensitivity

Jiaxing Wang and Shigeru Matsumoto

Energy Policy, 2025, vol. 207, issue C

Abstract: Households choose their heating systems when they build their houses and adjust their heating system use in their day-to-day decisions. This study examines winter energy consumption in households with different heating systems to determine whether households with different heating systems react differently to changes in energy prices. A selection bias correction model accounts for the possibility that unobservable household characteristics simultaneously affect heating system selection and energy consumption. Our estimates indicate that households using electricity as their primary energy source are more sensitive to price changes than those using kerosene. Furthermore, the price elasticity of winter energy demand was found to vary considerably across households with different heating systems. These results indicate that the effectiveness of carbon pricing varies among households with different heating systems.

Keywords: Central heating system; Price elasticity; Selection bias correction model; Winter energy consumption (search for similar items in EconPapers)
JEL-codes: D12 Q41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:207:y:2025:i:c:s0301421525003349

DOI: 10.1016/j.enpol.2025.114827

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