Interfuel substitution: A copula approach

Apostolos Serletis and Libo Xu

Journal of Commodity Markets, 2022, vol. 28, issue C

Abstract: We investigate interfuel substitution using the Minflex Laurent flexible demand system and a more flexible copula estimation approach. In doing so, we relax the joint normality assumption of the errors of the demand system and estimate the model without having to delete one equation as is usually the practice under the assumption of jointly normally distributed errors. The results indicate that the short-run Morishima elasticities of substitution among crude oil, natural gas, and coal are small, implying that one fuel has hardly utilized to substitute for another fuel.

Keywords: Minflex laurent model; Demand for energy (search for similar items in EconPapers)
JEL-codes: C3 Q3 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocoma:v:28:y:2022:i:c:s2405851322000058

DOI: 10.1016/j.jcomm.2022.100247

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