Semi‐parametric Modelling of Investments in Heating Installations: The Case of the Dutch Glasshouse Industry

Alfons Oude Lansink () and Kyosti Pietola

Journal of Agricultural Economics, 2005, vol. 56, issue 3, 433-448

Abstract: This paper applies a semi‐parametric approach to estimating a generalised model of investments in heating installations. The results suggest that marginal costs of investments in heating installations increase quickly at small investment levels, whereas the increase slows down at higher investment levels. Therefore, standard parametric adjustment cost models are probably biased such that they underestimate the costs of small investments and overestimate the costs of large investments. Results also show that investments in heating installations are very responsive to changes in energy prices. Therefore, an energy tax may be an effective instrument to encourage investments in new energy‐saving heating installations.

Date: 2005
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https://doi.org/10.1111/j.1477-9552.2005.00019.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jageco:v:56:y:2005:i:3:p:433-448

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