Simultaneous equation estimates of electricity demand for the rural south: Revenue projection when prices are administered

Presented are estimates of demand equations and producer revenue projections for rural farm electricity consumers in the USA. Statistical tests include a Box-Cox comparison of functional form, a Koyck-distributed lag, and a contrast of average versus marginal prices. Producer revenue projections take account of the estimated demand equation and non-continuous rate schedules for each of the electricity distributors. Multiple price equilibria result from differences in administered price schedules between sellers. The ‘effective’ price elasticity based upon forecasts which take account of the market circumstances is lower than the simple demand point elasticity but higher than found in some previous studies.