Industrial companies' demand for electricity: evidence from a micropanel

The paper presents a micro-econometric analysis of industrial companies' de mand for electricity. Previous studies on electricity consumption in the in dustrial sector have relied on aggregate data or cross-section observations . Here we present an econometric study on electricity demand based on a pan el of 2949 Danish companies followed from 1983 to 1996. It is found that es timators of electricity demand that take account of the panel structure (fi xed effect models) yield considerably lower price and production elasticiti es compared to estimators that do not (like cross-section models). It is al so investigated how various company characteristics like size, type of indu strial sub-sector and electricity intensity in production influence price a nd production elasticities. It appears that companies with a high electrici ty intensity also have a high own-price elasticity. (C) 2001 Elsevier Scien ce B.V. All rights reserved.