Publication Date
10-25-2018
Document Type
Article
Abstract
This study employs duality theory to develop a theoretical model for small commercial and industrial (CIS) electricity usage. The CIS production function is posited such that output is a function of three variable inputs (electricity, natural gas, and labor) and one fixed input (capital). A profit function dual to this production function is specified using a normalized quadratic functional form. CIS profits are functionally dependent upon output price, an electricity input price, and natural gas and labor input prices for a fixed quantity of capital. The derived input-demand equation results from differentiating the profit function with respect to the price of electricity. The in-put-demand equation for electricity is dependent upon the own-price of electricity, the CIS output price, and input cross-prices. The model may be of use to utilities and regulators for the analysis of CIS electricity usage.
Comments
K.R. Allen and T.M. Fullerton, Jr., 2018, “Analyzing Small Industrial and Commercial User Demand for Electricity,” Theoretical Economics Letters 8 (14), 3109-3115, doi: 10.4236/tel.2018.814193.