Answer:
Many countries are interested in reducing electricity consumption in connection with that the
electricity demand has been increasing in recent years. Price control is often used as a method of
controlling electricity demand in the short-term. However, even if price control causes to
decrease in electricity use, the decrease in electricity demand results in a decrease in economic
activity as electricity use plays a role in one of input factors. In this respect, this research analyze
how changes in electricity price influence electricity demand, and how subsequent changes in
electricity demand change production of manufacturing output, focusing particularly on how
these relationships change over space. In this paper, we use the simultaneous equation based on
Generalized spatial two-stage least squares model
among electricity demand, economic output, and electricity price. By assessing these
relationships in one modeling framework, we evaluate electricity-price scenarios to help
policymakers about electricity price decisions.
Explanation:
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