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Is the Price Elasticity of Demand for Coal in China Increasing?

Author

Listed:
  • Paul J. Burke

    (Crawford School of Public Policy, The Australian National University, Canberra, ACT, Australia)

  • Hua Liao

    (Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing, China)

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 the period 1998-2012. We find evidence 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 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. Our estimates suggest that 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?," CCEP Working Papers 1506, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:ccepwp:1506
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    More about this item

    Keywords

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

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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