Abstract:
This paper looks at the economy-wide demand and the firm level
demand for electricity in Pakistan. The economy wide estimation of
electricity demand uses panel data from 63 countries from 1998-2008, and
finds that the elasticity of demand for electricity with respect to per capita
income is approximately 0.69, which implies that a 1% increase in per
capita income will lead to a 0.69% increase in the demand for electricity.
The firm level analysis uses firm level data from the World Bank’s
Enterprise Survey for Pakistan and finds that the price elasticity of demand
for electricity across all firms is approximately -0.57, which implies that a
1% increase in electricity prices will lead to a 0.57% decrease in electricity
demand across firms. Across sectors, the textile sector has the highest price
elasticity of demand (-0.81) while the price elasticity of demand for firms in
the electricity and electronics sector is the smallest (-0.31). Finally, firm
level data is also used to estimate production functions in order to estimate
the impact of electricity shortages on manufacturing output.
