Revisiting income and price elasticities of electricity demand in Pakistan

Hanan Ishaque

Economic Research-Ekonomska Istraživanja, 2018, vol. 31, issue 1, 1137-1151

Abstract: In view of a more than decade-long power crisis in Pakistan, several studies have estimated income and price elasticities of electricity demand. These estimates are based on electricity consumption data that do not reflect actual demand due to an electricity supply shortfall of up to 6000 megawatts (MW). Moreover, previous studies accounted for power consumption data of only one of the two electric power companies, Pakistan Electric Power Company (P.E.P.C.O.), ignoring the other company K-Electric, with a share of over 15% in country’s electricity consumption. This study attempts to revisit electricity demand elasticities in Pakistan at the aggregate and sectoral level by including both P.E.P.C.O. and K-Electric and adjusting the consumption series for load shedding to reflect actual electricity demand. By employing an Autoregressive Distributive Lag model, the study finds electricity demand to be income elastic at aggregate level and in the agriculture sector in the long run, and relatively inelastic in the industrial sector. However, unlike previous studies, the electricity demand is price inelastic at all levels, which is an expected outcome in an economy facing electricity shortages. The coefficients of short-run income and price elasticities are smaller than their long-run counterparts. No evidence of cointegration is found for the commercial sector.

Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1331677X.2018.1457967 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:reroxx:v:31:y:2018:i:1:p:1137-1151

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rero20

DOI: 10.1080/1331677X.2018.1457967

Access Statistics for this article

Economic Research-Ekonomska Istraživanja is currently edited by Marinko Skare

More articles in Economic Research-Ekonomska Istraživanja from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().