TY - JOUR
T1 - Income elasticity of demand versus consumption
T2 - Implications for energy policy analysis
AU - Ghoddusi, Hamed
AU - Rodivilov, Alexander
AU - Roy, Mandira
N1 - Publisher Copyright:
© 2020 Elsevier B.V.
PY - 2021/3
Y1 - 2021/3
N2 - The income elasticity of consumption depends not only on the demand function but also on the characteristics of the supply function. If the supply of the underlying good (e.g., gasoline, natural gas, or housing) is not completely elastic, the income elasticity of equilibrium consumption will be less than the income elasticity of demand, with the difference depending on the shapes of both the demand and supply functions. We derive analytical expressions for the wedge between the two elasticities and discuss the implications for the energy policy analysis.
AB - The income elasticity of consumption depends not only on the demand function but also on the characteristics of the supply function. If the supply of the underlying good (e.g., gasoline, natural gas, or housing) is not completely elastic, the income elasticity of equilibrium consumption will be less than the income elasticity of demand, with the difference depending on the shapes of both the demand and supply functions. We derive analytical expressions for the wedge between the two elasticities and discuss the implications for the energy policy analysis.
KW - Demand elasticity
KW - Engel curve
KW - Income elasticity
KW - Income-emission relationship
KW - Supply elasticity
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U2 - 10.1016/j.eneco.2020.105009
DO - 10.1016/j.eneco.2020.105009
M3 - Article
AN - SCOPUS:85096546577
SN - 0140-9883
VL - 95
JO - Energy Economics
JF - Energy Economics
M1 - 105009
ER -