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The Price Elasticity of Electricity Demand in the United States: A Three-Dimensional Analysis

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  • Paul J. Burke
  • Ashani Abayasekara

Abstract

In this paper we employ a dataset of three dimensions—state, sector, and year—to estimate the short- and long-run price elasticities of state-level electricity demand in the United States. Our sample covers the period 2003-2015. We contribute to the literature by employing instrumental variable estimation approaches, using the between estimator, and pursuing panel specifications that enable us to control for multiple dimensions of fixed effects. We conclude that state-level electricity demand is very price inelastic in the short run, with a same-year elasticity of -0.1.

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  • Paul J. Burke & Ashani Abayasekara, 2018. "The Price Elasticity of Electricity Demand in the United States: A Three-Dimensional Analysis," The Energy Journal, , vol. 39(2), pages 123-146, March.
    • Handle: RePEc:sae:enejou:v:39:y:2018:i:2:p:123-146
    DOI: 10.5547/01956574.39.2.pbur
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    Keywords

    electricity demand; price elasticity; United States; panel;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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