IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v304y2021ics0306261921011132.html
   My bibliography  Save this article

Performance of tiered pricing policy for residential natural gas in China: Does the income effect matter?

Author

Listed:
  • Kuang, Yunming
  • Lin, Boqiang

Abstract

The tiered gas pricing (TGP) policy has been implemented nationwide in the residential sector in China since Jan. 2016. However, knowledge about China’s TGP performance and its influencing factors are limited, particularly the heterogeneous impact of income effect. Using a household-level survey, we attempt to investigate China’s TGP policy performance from a micro perspective, and further examine the impact of income effect on TGP performance, as well as its heterogeneity analysis. The main findings are concluded as follows: (1) We find from a random survey that the proportion of respondents accepting the effectiveness of the TGP performance is slightly higher than 50%. (2) The empirical results prove that in Chinese households, there exists an income effect on the TGP performance, i.e., household income has a significant and negative impact on the TGP performance. (3) Our heterogeneity analysis indicates that the income effect is much larger for the second block groups of households. More specifically, the second block has the largest income effect, followed by the third block, and the first block is the smallest. This paper sheds new light on the tiered pricing policy for residential sector and its heterogeneity policy effectiveness. Accordingly, some targeted policy implications are proposed based on the findings.

Suggested Citation

  • Kuang, Yunming & Lin, Boqiang, 2021. "Performance of tiered pricing policy for residential natural gas in China: Does the income effect matter?," Applied Energy, Elsevier, vol. 304(C).
    • Handle: RePEc:eee:appene:v:304:y:2021:i:c:s0306261921011132
    DOI: 10.1016/j.apenergy.2021.117776
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261921011132
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2021.117776?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wang, Zhaohua & Zhang, Bin & Yin, Jianhua & Zhang, Yixiang, 2011. "Determinants and policy implications for household electricity-saving behaviour: Evidence from Beijing, China," Energy Policy, Elsevier, vol. 39(6), pages 3550-3557, June.
    2. He, Xiaoping & Reiner, David, 2016. "Electricity demand and basic needs: Empirical evidence from China's households," Energy Policy, Elsevier, vol. 90(C), pages 212-221.
    3. Alberini, Anna & Gans, Will & Velez-Lopez, Daniel, 2011. "Residential Consumption of Gas and Electricity in the U.S.: The Role of Prices and Income," Sustainable Development Papers 99637, Fondazione Eni Enrico Mattei (FEEM).
    4. Sun, Chuanwang, 2015. "An empirical case study about the reform of tiered pricing for household electricity in China," Applied Energy, Elsevier, vol. 160(C), pages 383-389.
    5. Li, Wenhua & Adachi, Tsuyoshi, 2017. "Quantitative estimation of resource nationalism by binary choice logit model for panel data," Resources Policy, Elsevier, vol. 53(C), pages 247-258.
    6. Tan, Ruipeng & Lin, Boqiang, 2019. "Public perception of new energy vehicles: Evidence from willingness to pay for new energy bus fares in China," Energy Policy, Elsevier, vol. 130(C), pages 347-354.
    7. Chen, Xing & Lin, Boqiang, 2021. "Towards carbon neutrality by implementing carbon emissions trading scheme: Policy evaluation in China," Energy Policy, Elsevier, vol. 157(C).
    8. Holtedahl, Pernille & Joutz, Frederick L., 2004. "Residential electricity demand in Taiwan," Energy Economics, Elsevier, vol. 26(2), pages 201-224, March.
    9. Lin, Boqiang & Kuang, Yunming, 2020. "Natural gas subsidies in the industrial sector in China: National and regional perspectives," Applied Energy, Elsevier, vol. 260(C).
    10. Zorić, Jelena & Hrovatin, Nevenka, 2012. "Household willingness to pay for green electricity in Slovenia," Energy Policy, Elsevier, vol. 47(C), pages 180-187.
    11. Filip Matêjka & Alisdair McKay, 2015. "Rational Inattention to Discrete Choices: A New Foundation for the Multinomial Logit Model," American Economic Review, American Economic Association, vol. 105(1), pages 272-298, January.
    12. Martelli, Emanuele & Freschini, Marco & Zatti, Matteo, 2020. "Optimization of renewable energy subsidy and carbon tax for multi energy systems using bilevel programming," Applied Energy, Elsevier, vol. 267(C).
    13. Alberini, Anna & Gans, Will & Velez-Lopez, Daniel, 2011. "Residential consumption of gas and electricity in the U.S.: The role of prices and income," Energy Economics, Elsevier, vol. 33(5), pages 870-881, September.
    14. Hang Gao & Johannes Van Biesebroeck, 2014. "Effects of Deregulation and Vertical Unbundling on the Performance of China's Electricity Generation Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 62(1), pages 41-76, March.
    15. Sean Cleary, 1999. "The Relationship between Firm Investment and Financial Status," Journal of Finance, American Finance Association, vol. 54(2), pages 673-692, April.
    16. Du, Gang & Lin, Wei & Sun, Chuanwang & Zhang, Dingzhong, 2015. "Residential electricity consumption after the reform of tiered pricing for household electricity in China," Applied Energy, Elsevier, vol. 157(C), pages 276-283.
    17. Tan, Ruipeng & Xu, Mengmeng & Sun, Chuanwang, 2021. "The impacts of energy reallocation on economic output and CO2 emissions in China," Energy Economics, Elsevier, vol. 94(C).
    18. He, Y.X. & Xia, T. & Liu, Y.Y. & Zhou, L.F. & Zhou, B., 2013. "Residential natural gas price affordability analysis–A case study of Beijing," Renewable and Sustainable Energy Reviews, Elsevier, vol. 28(C), pages 392-399.
    19. Smriti Mallapaty, 2020. "How China could be carbon neutral by mid-century," Nature, Nature, vol. 586(7830), pages 482-483, October.
    20. Lin, Boqiang & Kuang, Yunming, 2020. "Household heterogeneity impact of removing energy subsidies in China: Direct and indirect effect," Energy Policy, Elsevier, vol. 147(C).
    21. Moshiri, Saeed, 2015. "The effects of the energy price reform on households consumption in Iran," Energy Policy, Elsevier, vol. 79(C), pages 177-188.
    22. He, Jiaxin & Lin, Boqiang, 2019. "Assessment of waste incineration power with considerations of subsidies and emissions in China," Energy Policy, Elsevier, vol. 126(C), pages 190-199.
    23. Avalos, Roger & Fitzgerald, Timothy & Rucker, Randal R., 2016. "Measuring the effects of natural gas pipeline constraints on regional pricing and market integration," Energy Economics, Elsevier, vol. 60(C), pages 217-231.
    24. Lin, Boqiang & Zhu, Junpeng, 2020. "Chinese electricity demand and electricity consumption efficiency: Do the structural changes matter?," Applied Energy, Elsevier, vol. 262(C).
    25. Li, Lanlan & Luo, Xuan & Zhou, Kaile & Xu, Tingting, 2018. "Evaluation of increasing block pricing for households' natural gas: A case study of Beijing, China," Energy, Elsevier, vol. 157(C), pages 162-172.
    26. Wang, Zhaohua & Zhang, Bin & Zhang, Yixiang, 2012. "Determinants of public acceptance of tiered electricity price reform in China: Evidence from four urban cities," Applied Energy, Elsevier, vol. 91(1), pages 235-244.
    27. Silva, Susana & Soares, Isabel & Pinho, Carlos, 2017. "Electricity demand response to price changes: The Portuguese case taking into account income differences," Energy Economics, Elsevier, vol. 65(C), pages 335-342.
    28. Zografakis, Nikolaos & Sifaki, Elli & Pagalou, Maria & Nikitaki, Georgia & Psarakis, Vasilios & Tsagarakis, Konstantinos P., 2010. "Assessment of public acceptance and willingness to pay for renewable energy sources in Crete," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(3), pages 1088-1095, April.
    29. Yurong Zhao & Yingying Zhang & Weixian Wei, 2021. "Quantifying international oil price shocks on renewable energy development in China," Applied Economics, Taylor & Francis Journals, vol. 53(3), pages 329-344, January.
    30. Cayla, Jean-Michel & Maizi, Nadia & Marchand, Christophe, 2011. "The role of income in energy consumption behaviour: Evidence from French households data," Energy Policy, Elsevier, vol. 39(12), pages 7874-7883.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Lizhi & Sun, Bo & Li, Fan, 2024. "Triple-layer joint optimization of capacity and operation for integrated energy systems by coordination on multiple timescales," Energy, Elsevier, vol. 302(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Lanlan & Luo, Xuan & Zhou, Kaile & Xu, Tingting, 2018. "Evaluation of increasing block pricing for households' natural gas: A case study of Beijing, China," Energy, Elsevier, vol. 157(C), pages 162-172.
    2. Wang, Zhaohua & Sun, Yefei & Wang, Bo, 2020. "Policy cognition is more effective than step tariff in promoting electricity saving behaviour of residents," Energy Policy, Elsevier, vol. 139(C).
    3. Wang, Chen & Zhou, Kaile & Yang, Shanlin, 2017. "A review of residential tiered electricity pricing in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 79(C), pages 533-543.
    4. Liu, Chang & Lin, Boqiang, 2020. "Is increasing-block electricity pricing effectively carried out in China? A case study in Shanghai and Shenzhen," Energy Policy, Elsevier, vol. 138(C).
    5. Gautam, Tej K. & Paudel, Krishna P., 2018. "Estimating sectoral demands for electricity using the pooled mean group method," Applied Energy, Elsevier, vol. 231(C), pages 54-67.
    6. Hung, Ming-Feng & Chie, Bin-Tzong, 2017. "The long-run performance of increasing-block pricing in Taiwan's residential electricity sector," Energy Policy, Elsevier, vol. 109(C), pages 782-793.
    7. Sun, Chuanwang, 2015. "An empirical case study about the reform of tiered pricing for household electricity in China," Applied Energy, Elsevier, vol. 160(C), pages 383-389.
    8. Aslam, Misbah & Ahmad, Eatzaz, 2023. "Untangling electricity demand elasticities: Insights from heterogeneous household groups in Pakistan," Energy, Elsevier, vol. 282(C).
    9. Zihan Zhang & Enping Li & Guowei Zhang, 2023. "How Efficient China’s Tiered Pricing Is for Household Electricity: Evidence from Survey Data," Sustainability, MDPI, vol. 15(2), pages 1-17, January.
    10. Jing Li & Lingling Song & Yanchun Zhu, 2020. "Subsidies, Clean Heating Choices, and Policy Costs: Evidence from Rural Households in Northern China," Sustainability, MDPI, vol. 13(1), pages 1-18, December.
    11. Wu, Ya & Zhang, Li, 2017. "Evaluation of energy saving effects of tiered electricity pricing and investigation of the energy saving willingness of residents," Energy Policy, Elsevier, vol. 109(C), pages 208-217.
    12. Kostakis, Ioannis & Lolos, Sarantis & Sardianou, Eleni, 2021. "Residential natural gas demand: Assessing the evidence from Greece using pseudo-panels, 2012–2019," Energy Economics, Elsevier, vol. 99(C).
    13. Hu, Wenhao & Ho, Mun S. & Cao, Jing, 2019. "Energy consumption of urban households in China," China Economic Review, Elsevier, vol. 58(C).
    14. Wang, Xiaolei & Wei, Chunxin & Wang, Yanhua, 2022. "Does the current tiered electricity pricing structure still restrain electricity consumption in China's residential sector?," Energy Policy, Elsevier, vol. 165(C).
    15. Ayertey, Winfred & Sharifi, Ayyoob & Yoshida, Yuichiro, 2024. "The impact of increase in block pricing on electricity demand responsiveness: Evidence from Ghana," Energy, Elsevier, vol. 288(C).
    16. Sania Malik, 2021. "Residential Electricity Consumers and Increasing Block Pricing Policy in Pakistan: Evidence Based on Household Level Primary Data," Journal of Economic Impact, Science Impact Publishers, vol. 3(2), pages 80-87.
    17. Dorothée Charlier & Sondès Kahouli, 2018. "Fuel poverty and residential energy demand: how fuel-poor households react to energy price fluctuations," Post-Print halshs-01957771, HAL.
    18. Chen, Han & Huang, Ye & Shen, Huizhong & Chen, Yilin & Ru, Muye & Chen, Yuanchen & Lin, Nan & Su, Shu & Zhuo, Shaojie & Zhong, Qirui & Wang, Xilong & Liu, Junfeng & Li, Bengang & Tao, Shu, 2016. "Modeling temporal variations in global residential energy consumption and pollutant emissions," Applied Energy, Elsevier, vol. 184(C), pages 820-829.
    19. Dorothée Charlier & Sondès Kahouli, 2019. "From Residential Energy Demand to Fuel Poverty: Income-induced Non-linearities in the Reactions of Households to Energy Price Fluctuations," The Energy Journal, , vol. 40(2), pages 101-138, March.
    20. Ohler, Adrienne M. & Billger, Sherrilyn M., 2014. "Does environmental concern change the tragedy of the commons? Factors affecting energy saving behaviors and electricity usage," Ecological Economics, Elsevier, vol. 107(C), pages 1-12.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:304:y:2021:i:c:s0306261921011132. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.