What effect will the increase in electricity price have on the manufacturing industries output​

Many countries are interested in reducing electricity consumption in connection with that the

electricity demand has been increasing in recent years. Price control is often used as a method of

controlling electricity demand in the short-term. However, even if price control causes to

decrease in electricity use, the decrease in electricity demand results in a decrease in economic

activity as electricity use plays a role in one of input factors. In this respect, this research analyze

how changes in electricity price influence electricity demand, and how subsequent changes in

electricity demand change production of manufacturing output, focusing particularly on how

these relationships change over space. In this paper, we use the simultaneous equation based on

Generalized spatial two-stage least squares model

among electricity demand, economic output, and electricity price. By assessing these

relationships in one modeling framework, we evaluate electricity-price scenarios to help

policymakers about electricity price decisions.

Explanation:

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