Short run price elasticity of residential electricity demand within income levels and the implications for CO2 policy

This thesis investigates the relationship between price and use of electricity in residential homes in order to understand the impact of CO2 policy. A model is developed based on household, structural, regional, weather, and appliance variables. Data is collated from the Bureau of Labor Statistics, the National Oceanic and Atmospheric Administration and the Consumer Expenditure survey. The price elasticity of electricity demand is determined using generalized least squares regression analysis. Unlike other studies, the price of electricity is found to be insignificant in determining the demand of electricity. This study shows that price is only influential on demand for household incomes above $75,000. The expected impact on the residential sector of a price change from CO2 legislation is calculated. Only a portion of the population will respond to CO2 pricing policies, and the impact on demand for electricity of those households is low. It is determined that further investigation of the price elasticity of demand is necessary before implementing policy that uses price controls.

Name thesis:degree_name

M.S.

Level thesis:degree_level

Thesis

Discipline thesis:degree_discipline

Natural Res & Env Sciences

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2013

Author dc:creator

• Green, Eric

Contributors dc:contributor

• Sullivan, William C.

• price elasticity
• residential electricity demand
• CO2 policy
• income elasticity of demand

Statement dc:rights

• Copyright 2013 Eric Green

Language dc:language

en

Handle dc:identifier

http://hdl.handle.net/2142/44178

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/44178