Electricity has a high impact in the activities and sectors of any economy. A considerable amount of studies relates the importance of electricity to economic growth of nations. Dominican Republic, though, has been in a process of energy reform, has not yet developed a stable electric delivering. This study is firstly conducted to ensure an overview of the electricity sector of Dominican Republic, describing the energy mix, national electricity situation, and main concerns on the sector reform that have been in process including other Latin American countries. Secondly, the paper aims to determine the elasticity of demand on energy generation sector through log linear regression method; analyzing the variation of price and quantity of demand interaction. Related researches concerning elasticity of demand in other countries such as Australia, Israel, China and United States, shows close similarity to our result, where elasticity tends to be inelastic (0.57) but not perfectly inelastic to variation on price. While the energy market structures by sectors may be complex, customers’ response to pricing signals can promote efficient investment in the long-run term, help mitigate short-run market power by generators and transmission owners, reduce price spikes, low price volatility, and consequently support price mechanism.
Testing for Changes in the Price Elasticity of Residential Electricity Demand