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A new approach to measuring the rebound effect associated to energy efficiency improvements: An application to the US residential energy demand

Luis Orea (), Manuel Llorca () and Massimo Filippini ()

Energy Economics, 2015, vol. 49, issue C, 599-609

Abstract: This paper brings attention to the fact that the energy demand frontier model introduced by Filippini and Hunt (2011, 2012) is closely connected to the measurement of the so-called rebound effect associated with improvements in energy efficiency. In particular, we show that their model implicitly imposes a zero rebound effect, which contradicts most of the available empirical evidence on this issue. We relax this restrictive assumption through the modelling of a rebound-effect function that mitigates or intensifies the effect of an efficiency improvement on energy consumption. We illustrate our model with an empirical application that aims to estimate a US frontier residential aggregate energy demand function using panel data for 48 states over the period 1995 to 2011. Average values of the rebound effect in the range of 56–80% are found. Therefore, policymakers should be aware that most of the expected energy reduction from efficiency improvements may not be achieved.

Keywords: US residential energy demand; Efficiency and frontier analysis; State energy efficiency; Rebound effect (search for similar items in EconPapers)
JEL-codes: C5 Q4 Q5 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:49:y:2015:i:c:p:599-609

DOI: 10.1016/j.eneco.2015.03.016

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Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

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