Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/270690 
Year of Publication: 
2019
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 7 [Issue:] 1 [Article No.:] 1682743 [Year:] 2019 [Pages:] 1-17
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
A sustainable energy system is key for addressing the world's environmental and social challenges. The U.S is the second largest consumer of energy, with increased energy consumption in the previous half-century. To curb energy demand, it is essential to understand the relative price elasticities among the four main U.S energy consumption sectors; residential, industrial, commercial and transportation. The aim of this study is to present a theory-based comparative analysis of U.S sectoral energy price elasticities using the pooled mean group model. The speed of adjustment for the four sectors were -0.43, -0.41, -0.55 and -0.37, suggesting the existence of long-run relationships. The short-run own-price elasticities were -0.17, -0.39 and -0.27 for the commercial, industrial and residential sectors while the long-run own-price elasticities were -0.33, -0.45 and -0.20 for the commercial, residential and transportation sectors. We conclude that the residential sector readjusts to long-run equilibrium at a faster rate than the three other sectors. In the long run, this sector will yield a higher response to a price change. We suggest that price policies aimed at reducing energy demand should primarily target the residential sector, followed by the commercial and transportation sectors.
Subjects: 
elasticity
PMG
energy demand
speed of adjustment
48 U.S. states
1970 to 2015
JEL: 
E64
N7
Q41
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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