The Role of Pre-Commitments and Engle Curves in Thailand’s Aggregate Energy Demand System
In the present paper, an investigation into Thailand’s energy demand is performed to determine if: (1) a linear or nonlinear Engel curve better explains the relationship between income and energy consumption, and (2) systems with pre-commitments better model energy consumptions. Four demand systems...
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| Format: | Article |
| Language: | English |
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MDPI AG
2022-02-01
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| Series: | Energies |
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| Online Access: | https://www.mdpi.com/1996-1073/15/4/1578 |
| _version_ | 1797480646149406720 |
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| author | Kannika Duangnate James W. Mjelde |
| author_facet | Kannika Duangnate James W. Mjelde |
| author_sort | Kannika Duangnate |
| collection | DOAJ |
| description | In the present paper, an investigation into Thailand’s energy demand is performed to determine if: (1) a linear or nonlinear Engel curve better explains the relationship between income and energy consumption, and (2) systems with pre-commitments better model energy consumptions. Four demand systems are estimated: an almost ideal demand system (AIDS), the quadratic almost ideal demand system (QAIDS), generalized almost ideal demand system (GAIDS), and the generalized quadratic almost ideal demand system (GQAIDS). Elasticities are calculated for policy implications. The empirical results suggest that models considering pre-commitments and nonlinear Engel curves may be slightly more appropriate for Thailand’s energy system, from both statistic and economic standpoints. Statistical inferences appear to favor the GQAIDS model based on the encompassing results. Economic reasonability also appears to favor the GQAIDS model, in particular, petroleum products, as it provides results consistent with the notions of precommitments and fuel substitutability found in previous studies. Most of the previous studies in various forms have shown that the demand for petroleum products is relatively inelastic to price in Thailand. The current study, however, finds that own-price elasticities of uncompensated demand for petroleum products are almost unitary, which is relatively more elastic than most of the previous studies. As such, further studies are required and the price-based policy on petroleum products targeting the reduction in petroleum product dependence must be implemented with caution. |
| first_indexed | 2024-03-09T22:03:03Z |
| format | Article |
| id | doaj.art-e98d5babb3e3403cb22bf0ca452f5f35 |
| institution | Directory Open Access Journal |
| issn | 1996-1073 |
| language | English |
| last_indexed | 2024-03-09T22:03:03Z |
| publishDate | 2022-02-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Energies |
| spelling | doaj.art-e98d5babb3e3403cb22bf0ca452f5f352023-11-23T19:46:19ZengMDPI AGEnergies1996-10732022-02-01154157810.3390/en15041578The Role of Pre-Commitments and Engle Curves in Thailand’s Aggregate Energy Demand SystemKannika Duangnate0James W. Mjelde1Faculty of Economics, Chiang Mai University, Chiang Mai 50200, ThailandDepartment of Agricultural Economics, Texas A&M University, College Station, TX 77843, USAIn the present paper, an investigation into Thailand’s energy demand is performed to determine if: (1) a linear or nonlinear Engel curve better explains the relationship between income and energy consumption, and (2) systems with pre-commitments better model energy consumptions. Four demand systems are estimated: an almost ideal demand system (AIDS), the quadratic almost ideal demand system (QAIDS), generalized almost ideal demand system (GAIDS), and the generalized quadratic almost ideal demand system (GQAIDS). Elasticities are calculated for policy implications. The empirical results suggest that models considering pre-commitments and nonlinear Engel curves may be slightly more appropriate for Thailand’s energy system, from both statistic and economic standpoints. Statistical inferences appear to favor the GQAIDS model based on the encompassing results. Economic reasonability also appears to favor the GQAIDS model, in particular, petroleum products, as it provides results consistent with the notions of precommitments and fuel substitutability found in previous studies. Most of the previous studies in various forms have shown that the demand for petroleum products is relatively inelastic to price in Thailand. The current study, however, finds that own-price elasticities of uncompensated demand for petroleum products are almost unitary, which is relatively more elastic than most of the previous studies. As such, further studies are required and the price-based policy on petroleum products targeting the reduction in petroleum product dependence must be implemented with caution.https://www.mdpi.com/1996-1073/15/4/1578energy demandprecommitmentsEngel curveGQAIDSGAIDSQAIDS |
| spellingShingle | Kannika Duangnate James W. Mjelde The Role of Pre-Commitments and Engle Curves in Thailand’s Aggregate Energy Demand System Energies energy demand precommitments Engel curve GQAIDS GAIDS QAIDS |
| title | The Role of Pre-Commitments and Engle Curves in Thailand’s Aggregate Energy Demand System |
| title_full | The Role of Pre-Commitments and Engle Curves in Thailand’s Aggregate Energy Demand System |
| title_fullStr | The Role of Pre-Commitments and Engle Curves in Thailand’s Aggregate Energy Demand System |
| title_full_unstemmed | The Role of Pre-Commitments and Engle Curves in Thailand’s Aggregate Energy Demand System |
| title_short | The Role of Pre-Commitments and Engle Curves in Thailand’s Aggregate Energy Demand System |
| title_sort | role of pre commitments and engle curves in thailand s aggregate energy demand system |
| topic | energy demand precommitments Engel curve GQAIDS GAIDS QAIDS |
| url | https://www.mdpi.com/1996-1073/15/4/1578 |
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