Asymmetric adaptations to energy price changes

Gerard Kuper and Daan van Soest

No 199913, CCSO Working Papers from University of Groningen, CCSO Centre for Economic Research

Abstract: The effectiveness of policies to reduce the use of energy depend on the elasticity of substitution between the various inputs and on the rate of technological progress. This paper presents a theoretical model emphasising energy investments\' characteristics of uncertainty and irreversibility that result in testable hypotheses concerning the relative values of substitution parameters and rates of technological change in periods of high and increasing energy prices and in periods of low prices. Estimation results for a panel of sectors of the Dutch economy show that the elasticity of substitution between energy and other inputs is low in periods of low energy prices, whereas it is significantly higher in the preceding period of high and increasing energy prices. Furthermore, energy-saving technological progress in periods of high and increasing energy prices is also significantly higher than if energy prices are low and falling. The regression results suggest that, due this asymmetric response of firms to changes in energy prices, taxing energy in the current period of low energy prices will not yield substantial reductions in energy use of Dutch industry.

Date: 1999
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://irs.ub.rug.nl/ppn/241132657 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://irs.ub.rug.nl/ppn/241132657 [302 Found]--> https://irs.ub.rug.nl/ppn/241132657 [302 Found]--> https://www.rug.nl/research/portal/publications/pub(51fe798b-0d9d-417a-9433-2a3a39d6fd9c).html [301 Moved Permanently]--> https://research.rug.nl/en/publications/pub(51fe798b-0d9d-417a-9433-2a3a39d6fd9c).html)

Related works:
Working Paper: Asymmetric adaptations to energy price changes (1999)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gro:rugccs:199913

Access Statistics for this paper

More papers in CCSO Working Papers from University of Groningen, CCSO Centre for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by Hanneke Tamling ().