Fuel Demand Elasticities for Energy and Environmental Policies: Indian Sample Survey Evidence

Haripriya Gundimeda () and Atheendar Gunnar Köhlin ()
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Haripriya Gundimeda: Madras School of Economics
Atheendar Gunnar Köhlin: Environmental Economics Unit, Department of Economics,Göteborg University.

Working Papers from Madras School of Economics,Chennai,India

Abstract: India has been running large-scale interventions in the energy sector over the last decades. Still, there is a dearth of reliable and readily available price and income elasticities of demand to base these on, especially for domestic use of traditional fuels. This study uses the linear approximate almost ideal demand system (LA-AIDS) using micro data of more than 100,000 households sampled across India. The LA-AIDS model is expanded by specifying the intercept as a linear function of household characteristics. Marshallian and Hicksian price and expenditure elasticities of demand for four main fuels are estimated for both urban and rural areas by different income groups. These can be used to evaluate recent and current energy policies. The results can also be used for energy projections and carbon dioxide simulations given different growth rates for different segments of the Indian population.

Keywords: LA-AIDS; fuel; India; income; price; elasticities; NSSO data (search for similar items in EconPapers)
JEL-codes: C2 Q2 Q4 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2006-06
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Citations: View citations in EconPapers (9)

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