Residential demand for electricity and pricing policy implications in a developing economy: the case of the Philippines

Abstract

A simple model is used to estimate the short-run and long-run elasticities of demand for electricity by residentialconsumers in the Manila Electric Company franchise area in the Philippines,. Residential demand for electricity is found to be responsive to its own price, the price of electricity consuming equipment, environmental variables and to a certain extent income, Marginal, intramarginal and average prices comprise the own price variables. A finding of positive marginal price elasticity is explained in terms of consumers' response to Signals given by a structure of subsidized prices. Some pricing policy implications are derived.