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Short-run and long-run elasticities of diesel demand in Korea

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  • Short-run and long-run elasticities of diesel demand in Korea
  • Lim, Kyoung-Min; Kim, Myunghwan; Kim, Chang Seob; Yoon, Seung-Hoon
  • Multidisciplinary Digital Publishing Institute


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Title Short-run and long-run elasticities of diesel demand in Korea
Similar Titles
Material Type Article
Author(English)

Lim, Kyoung-Min; Kim, Myunghwan; Kim, Chang Seob; Yoon, Seung-Hoon

Publisher

Basel, Switzerland : Multidisciplinary Digital Publishing Institute

Date 2012-11
Journal Title; Vol./Issue Energies:vol. 5
Pages 10
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Industry and Technology < Energy
Holding MDPI
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Abstract

This paper investigates the demand function for diesel in Korea covering the period 1986–2011. The short-run and long-run elasticities of diesel demand with respect to price and income are empirically examined using a co-integration and error-correction model. The short-run and long-run price elasticities are estimated to be −0.357 and −0.547, respectively. The short-run and long-run income elasticities are computed to be 1.589 and 1.478, respectively. Thus, diesel demand is relatively inelastic to price change and elastic to income change in both the short-run and long-run. Therefore, a demand-side management through raising the price of diesel will be ineffective and tightening the regulation of using diesel more efficiently appears to be more effective in Korea. The demand for diesel is expected to continuously increase as the economy grows.