Investigating the Function of Energy Demand in the Residential Sector of Rural and Urban Families in Ilam Province by Regression of Seemingly Unrelated Equations

Modeling of energy demand in different consumer sectors is an important step for better management and appropriate policy to increase productivity in the energy sector. The residential sector is one of the most important components of energy consumption in Iran and the Ilam province. The aim of this study was to investigate the energy demand function in the household sector of Ilam province. The research method was performed using an Almost Ideal Demand System (AIDS) and Regression of Seemingly Unrelated Equations for the period of 1988 to 2018. The results of the evaluation of the model as constrained and non-constrained models show that the self-price elasticity in these two cases is not significantly different from each other and all price elasticities agree with the theoretical foundations. Since the existence of homogeneity constraint in this model has been confirmed. The results of income elasticity show that this group is an essential commodity for households in Ilam province. The price elasticity of energy demand includes gas and electricity in the non-constrained model of -2.02 and in the constrained model of -0.04, which indicates the attractiveness of this group of goods in the consumption basket of households of Ilam. Also, the results of income elasticity of the unrestricted model show that the energy commodity group (including electricity and natural gas), another commodity group, clothing, and housing are among the luxury goods, and the health and food commodity group are among the essential goods. They are going. Also, based on income elasticities, the model of the constrained commodity group of energy (electricity and natural gas) is considered a semi-essential commodity. Housing and other commodity groups are also considered as luxury goods, as well as food and clothing commodity groups are considered as semi-essential goods groups and health goods groups are considered as essential commodity groups.