The Economics of Conserved-Energy "Supply" Curves*

Steven E. Stoft

The Energy Journal, 1995, vol. 16, issue 4, 109-137

Abstract: This paper develops the theoretical underpinnings of conservation "supply " curves (CSCs), and in doing so uncovers several problems with current procedures for their construction. The CSC is shown to be derivable from a production isoquant, and not to be a true supply curve. The traditional algorithm for constructing a CSC from discrete measures is shown to be suboptimal, contrary to prior claims. Omitting conservation measuresfrom consideration can lead to systematic, excessive conservation. The CSC concept is extended from constant-service to constant-utility measures, and an improved approximation is suggested for the cost of conserved energy (CCE) of measures that cause rebound. The appendix provides a formula for CCE that is simple yet more general than the one currently in use, but shows that even with this generalization, CSCs cannot be constructed for a world with fluctuating energy prices.

Keywords: Conservation supply curves; energy prices; electricity demand; rebound effect; energy efficiency (search for similar items in EconPapers)
Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:16:y:1995:i:4:p:109-137

DOI: 10.5547/ISSN0195-6574-EJ-Vol16-No4-5

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