Abstract
The study aims to estimate fuel demand elasticities for domestic sector in Pakistan. The
study applies the Linear Approximate Almost Ideal Demand System (LA-AIDS) using
micro data of Household Integrated Economic Survey (HIES) for the year 2007-08. The
LA-AIDS model is also expanded by making intercept as linear function of different
household characteristic. The price and expenditure elasticities of demand for five major
fuel items (electricity, gas, firewood, kerosene & dung cake) are estimated. The analysis
has been carried out for rural and urban areas of Pakistan. The results of expenditure
elasticities imply that all energy sources are necessity for all rural and urban households.
It is also found that own price elasticities are greater than one which indicates energy
items are price elastic. It is evident that education has positive impact on electricity
budget share and negative impact on dung cake and firewood in most of the cases.
Muhammad Jamil, Maria Hakim, Rizwan Ahmed Satti. (2018) Fuel Demand Elasticity in Pakistan: An Analysis Based on Household Integrated Economic Survey (HIES), NUML International Journal of Business & Management, Volume 13, Issue 2.
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