Residential Demand for Electric Energy in Chile
Abstract
In Chile, where demand for energy is constantly growing and which faces a stochastic energy supply, it is important to identify the determinants of household demand for electric energy. In particular, it is necessary to precisely identify its price elasticity with the goal of implementing pricing flexibility mechanisms to reduce potential energy shortages. This paper estimates the residential electricity demand using disaggregated data at the household level and explicitly considering the substitution role of liquefied petroleum gas, all of which is an improvement with respect to other studies for Chile. The results are fairly consistent with previous research, showing a price elasticity quite inelastic but that would allow implementing a policy of demand management as part of an energy efficiency policy to deal with negative electric energy supply shocks in Chile.
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