Estimating Demand Function for Electricity in the Industrial Sector of Iran using Structural Time Serie

This study investigates the relationships among electricity consumption, real economic activity, real price of
electricity, real price of natural gas and the underlying energy demand trend (UEDT) for the industrial sector of Iran. To achieve this goal, an electricity demand function for industrial sector of Iran is estimated by applying the structural time series technique to annually data for the period from 1981 to 2011. In addition to identifying the size and significance of the price and output elasticities, this technique also uncovers UEDT. It is found that the estimated long-run and short-run industrial value added
 output) elasticity is respectively, 0.85 and 0.36 and the estimated long-run and short-run industrial energy price elasticity is -0.47 and -0.27, respectively. Long-run and short-run cross elasticities of natural gas are 0.09 and 0.11, respectively