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Energy Demand with the Flexible Double-Logarithmic Functional Form

A flexible double-logarithmic function form is developed to meet assumptions of consumer behavior. Then annual residential and commercial data (1970-87) are applied to this functional form to examine demand for petroleum products, electricity, and natural gas in California. The traditional double lo-linear functional form has shortcomings ofconstant elasticities. The regression equations in this study, with varied estimated elasticities, overcome some of these shortcomings. All short-run own-price elasticities are inelastic and all income elasticities are close to unity inthis study. According to the short-run time-trend elasticities, consumers' fuel preference in California is electricity. The long-run income elasticities also indicate that the residential consumers will consume more electricity and natural gas as their energy budgets increase in the long run.

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Energy Specializations: Energy Modeling – Sectoral Energy Demand & Technology

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q40: Energy: General, D12: Consumer Economics: Empirical Analysis

Keywords: Flexible functional form, Energy demand, oil, electricity, natural gas, California

DOI: 10.5547/ISSN0195-6574-EJ-Vol13-No4-8

Published in Volume 13, Number 4 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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