Abstract
The study aims to investigate the consumption behavior of households
towards energy items and impact of socio-economic determinants on
fuel demand in Pakistan. To figure out consumer’s approachability,
subject to different fuel prices and expenditure, demand elasticities are
calculated by using Household Integrated Economic Survey data for the
year 2015-16. The study also explores the impact of some of the crucial
determinants in energy demand modeling and existence of economies
of scale. Different determinants including number of earners in a
household and number of rooms in a dwelling, number of durable
commodities owned by a household and construction type of the
house, came out to have a significant impact in determining fuel budget
share of households. As the results for housing factors showed that
with growing incomes and living standards, energy consumptions is
going to further increase Electricity and gas are substitutes of each
other and also act separately as substitute or complement of other
fuels at national levels. Since all the fuels came out to be necessities,
any taxation policy to reduce demand would increase the payment
burden on consumers. Finally, scale economies have found in these
inelastic fuel items, and they do significantly vary directly or indirectly
with changes in their important determinants.
