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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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