Regionally-varying and Regionally-uniform Electricity Pricing Policies Compared across Four Usage Categories

Seong-Hoon Cho (), Taeyoung Kim, Hyun J. Kim, Kihyun Park and Roland Roberts

No 204324, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: The objective of our research is to predict how electricity demand varies spatially between status quo regionally-uniform electricity pricing and hypothetical regionally-varying electricity pricing across usage categories. We summarize the empirical results of a case study of electricity demand in South Korea with three key findings and their related implications. First, the price elasticities of electricity demand differ across usage categories. Specifically, electricity demands for manufacturing and retail uses were price inelastic and close to unit elastic, respectively, while those for agricultural and residential uses were not statistically significant. This information is important in designing energy policy, because higher electricity prices could reduce electricity demands for manufacturing and retail uses, resulting in slower growth in those sectors. Second, spatial spillovers in electricity demand vary across uses. Understanding the spatial structure of electricity demand provides useful information to energy policy makers for anticipating changes in demand across regions via regionally-varying electricity pricing for different uses. Third, simulation results suggest that spatial variations among electricity demands by usage category under a regionally-varying electricity-pricing policy differ from those under a regionally-uniform electricity-pricing policy. Differences in spatial changes between the policies provide information for developing a realistic regionally-varying electricity-pricing policy according to usage category.

Keywords: Resource/Energy; Economics; and; Policy (search for similar items in EconPapers)
Pages: 1-37
Date: 2015
New Economics Papers: this item is included in nep-ene and nep-ure
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Citations: View citations in EconPapers (13)

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Journal Article: Regionally-varying and regionally-uniform electricity pricing policies compared across four usage categories (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea15:204324

DOI: 10.22004/ag.econ.204324

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