This thesis studies the income elasticity and the price elasticity of the residential electricity demand in Korea.
Special attention is given to the singular features of electricity demand, the facts that electricity is purchased according to multipart block tariffs and that the demand for electricity is a derived demand via appliance stocks.
To delineate the theoretical implications of these features, we construct single equation demand models (using ex post average price, marginal price and price perception function respectively) and a two-equation model (demand, ex post average price).
Using time series data from 1967 through 1985, the elasticities are estimated and analyzed: short-run elasticities are -0.13-0.62 for price and 0.51-0.77 for income, while long-run elasticities are -0.29-0.88 for price and 1.11-1.80 for income.
An appliance stock variable is introduced and substituted for the lagged variable in the two-equation model. This new two-equation model is estimated and the results are compared with the above ones.
Finally limitations of this study and suggestions for future research are presented.
