Abstract

BARRIENTOS, Jorge et al. On the estimation of the price elasticity of electricity demand in the manufacturing industry of Colombia. Lect. Econ. [online]. 2018, n.88, pp.155-182. ISSN 0120-2596.  https://doi.org/10.17533/udea.le.n88a05.

This paper presents an estimation of the reaction of electricity demand to changes in price levels of forward contracts in the manufacturing industry of Colombia. To that end, a structural vector autoregressive (SVAR) model was developed, considering several economic activities at different voltage levels. The industrial sectors under study showed an electricity demand not significantly sensitive to price variations. However, the food and drink sectors, plastic and rubber manufacturing, as well as retail trade turned out to be more sensitive to price shocks than the chemical industry or textile manufacturing. Such inelasticity could be softened if information concerning prices and quantity demanded were of common knowledge, or if the forward curve were observable.

Keywords : electricity markets; forward contracts; price elasticity of demand; SVAR models.

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