The demand for electricity in Pakistan

This paper examines the patterns of electricity demand in Pakistan over the period 1970–2006 using autoregressive distributed lag technique to cointegration. Long run and short‐run price and income elasticities are examined for the national level and for the three major consumer's categories—households, industry and agriculture. The overall results suggest that income and price elasticities possess expected signs at aggregate and disaggregate levels in the long run as well as in the short run. The error correction terms possess expected negative signs and are highly significant with reasonable magnitudes. Furthermore, the estimated long run and short‐run electricity demand functions remains stable over the sample period. The results thus convey important information to the agents operating in the electricity market regarding the pricing policies and helps in planning the future strategy of electricity demand management.