The Anatomy of electricity demand: A CGE decomposition for Norway
Working paper
Åpne
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http://hdl.handle.net/11250/180277Utgivelsesdato
2005Metadata
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Sammendrag
Abstract:
The paper derives a general equilibrium demand function for electricity by imposing a
specific closure rule on a large CGE-model of the Norwegian economy. By a decomposition
technique it quantifies the contribution from various mechanisms to the price sensitivity of
aggregate electricity demand. Specifically, it identifies the contributions from substitution at
the micro level, as well as changes in the industry structure to the substitution at the
aggregate level. It also separates the substitution effects of equilibrium adjustments of other
prices than the electricity price, and macroeconomic income effects on total demand. The
direct price elasticity of aggregate electricity demand is estimated to -0.31. Within industry
factor substitution contributes most to this response.