Estimation of Natural Gas Demand Function in Residential and Commercial Sectors in Iran: a Nonlinear Approach

Subject Areas : Applied Economics

علیرضا حاج ملاعلی کنی ¹ (مسئول مکاتبات)
مجید عباسپور ² (ندارد)
زهرا عابدی ³ (ندارد)

Received: 2013-07-16 Accepted : 2014-01-22 Published : 2013-03-21

Keywords: Natural Gas Demand, Residential and Commercial Sec, STR Model,

Abstract :

This paper attempts to model the demand function for natural gas in residential and commercial sectors in Iran using econometric approach of smooth transition regression in a continuous and nonlinear manner. To this end, the annual data of natural gas real price and electricity real price in residential and commercial sectors, revenue, the number of natural gas consumers and mean temperature for the period 1972 to 2009 have been utilized as the impact factors of natural gas demand in residential and commercial sectors. The results indicate that natural gas demand follows a two-regime pattern of LSTR1 considering the real price of natural gas in residential and commercial sectors as the transition variable. The LSTR1 model estimated the regime switching point, or the threshold extreme, to be at 60.95 Rials-Cubic Meter of real price of natural gas, and determined the slope parameter to be 27.6. Variables such as revenue, real price of gas, and the number of consumers affect the natural gas consumption positively in residential and commercial sectors and their effectiveness increase as the threshold extreme is passed. Natural gas demand. On the other hand, it maintains an inverse relation with the real price of natural gas whose effectiveness increases with entry into the second regime.