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Is the price elasticity of demand for coal in China increasing?

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  • Paul J. Burke
  • Hua Liao

Abstract

China's dependence on coal is a major contributor to local and global environmental problems. In this paper we estimate the price elasticity of demand for coal in China using a panel of province-level data for 1998-2012. We find that provincial coal demand has become increasingly price elastic. As of 2012 we estimate that this elasticity was in the range -0.3 to -0.7 in point estimate terms when responses over two years are considered. The results imply that China's coal market is becoming more suited to price-based approaches to reducing emissions. The elimination of coal consumption subsidies could reduce national coal use and related emissions by around 2%.

Suggested Citation

  • Paul J. Burke & Hua Liao, 2015. "Is the price elasticity of demand for coal in China increasing?," CEEP-BIT Working Papers 85, Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology.
    • Handle: RePEc:biw:wpaper:85
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    More about this item

    Keywords

    coal; price elasticity; demand; China; provincial;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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