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Industrial and Commercial Demand for Electricity by Time-of-Day: A California Case Study

Chinbang Chung, Dennis J. Aigner

Year: 1981
Volume: Volume 2
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol2-No3-7
View Abstract

Abstract:
Recently there has been much interest in time-of-use (TOU) pricing structures for electric utilities. TOU pricing reflects more closely than conventional pricing the cost components of supplying electricity, which vary over the course of a single day as well as over days of the week and seasons of the year. Although such pricing structures have long been used in Europe, they did not receive much attention in the United States prior to 1974.



A Comparison of Multivariate Logit and Translog Models for Energy and Nonenergy Input Cost Share Analysis

Thomas J. Lutton and Michael R. LeBlanc

Year: 1984
Volume: Volume 5
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol5-No4-3
View Abstract

Abstract:
With the advent of the translogarithmic (translog) cost function has come greater interest in estimating systems of input share equations (Christensen and Greene, 1976; Berndt and Wood, 1975). A distinguishing feature of the translog cost function is that optimal input shares are linear in parameters. The linearity arises from the second-order approximation and facilitates estimation of the share system. Linearity, however may result in negative fitted shares if error terms are assumed to be additive and normally distributed. Woodland (1979) demonstrated that maximum likelihood estimators with an underlying Dirichlet distribution constrain fitted shares to be inside the zero-one interval for the sample. However, it is possible to obtain shares outside the zero-one interval when the model is used for forecasting. Moreover, there is no theoretical reason why input shares should be monotonic in input prices. If a third-order Taylor series expansion is assumed, the monotonicity restriction can be relaxed, but such an assumption sacrifices the principle of parametric parsimony (Fuss et al., 1978).



Validating Allocation Functions in Energy Models: An Experimental Methodology

V. Kerry Smith and Lawrence J. Hill

Year: 1985
Volume: Volume 6
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol6-No4-4
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Abstract:
In the late 1970s, the Energy Information Administration initiated a program calling for review and evaluation of its data and validation of energy models used in support of the policymaking process. One of the more controversial aspects of this program was the effort to validate the large-scale energy models developed under DOE auspices and, in some cases, still under development. As all participants in this process (i.e., modelers and evaluators) acknowledge, there is no absolute standard by which a model can be validated. By definition, a model is an approximation to some real-world process. It abstracts from the complexities of the process but is intended to capture essential dimensions of the forces governing outcomes of that process. Consequently, all evaluations of a model involve judgment. To illustrate the prospects for divergent yet individually sensible judgments of an energy model, consider a recent appraisal of the Regional Demand Forecasting Model (RDFOR).



Cost Shares, Own, and Cross-Price Elasticities in U.S. Manufacturing with Disaggregated Energy Inputs

Mahmood Moghimzadeh and Kern O. Kymn

Year: 1986
Volume: Volume 7
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol7-No4-4
View Abstract

Abstract:
Our purpose is to estimate cost shares and own-land cross-price elasticities of the demand for factors in the production of manufacturing output. To achieve more precise estimates than those of previous researchers, we do not consider energy a single unified input. It is disaggregated instead into electric and nonelectric energy. The period considered spans the years 1954 to 1977. The following brief review of the literature outlines the background.Hudson and Jorgenson (1974) studied the demand for manufacturing production factors. They subsequently estimated the own- and cross-price elasticities of demand for the various factors by applying a translog cost function at the industry level. Their model included capital, labor, energy, and nonenergy inputs.



Price Elasticities of Natural Gas Demand in France and West Germany

Javier Estrada and Ole Fugleberg

Year: 1989
Volume: Volume 10
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol10-No3-5
View Abstract

Abstract:
This article analyzes the own-price elasticities of natural gas and cross-price elasticities between gas and other fuels in France and West Germany. A model with constant substitution elasticities would not give enough information to study interfuel competition. Therefore we adopted a model based on translog functions, which has few restrictions on measuring elasticities of energy demand.



Customer Responsiveness to Real-Time Pricing of Electricity

Jay Zarnikau

Year: 1990
Volume: Volume 11
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol11-No4-6
View Abstract

Abstract:
The success of real-time pricing efforts will depend in large part upon the extent to which electricity consumers are able to alter their consumption patterns in response to the prices quoted by the utility. This article provides some original estimates of hourly price elasticity responses to real-time prices by large industrial energy consumers.



Methodological Advances in Energy Modelling: 1970-1990

James M. Griffin

Year: 1993
Volume: Volume 14
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol14-No1-5
View Abstract

Abstract:
Both the theory and practice of energy modelling have made phenomenal advances over the last 20 years. After providing a brief description of the state of energy modelling circa 1970, this paper identifies four major methodological advances profoundly affecting energy modelling. In the area of energy demand modelling, the translog and other generalized functional forms have proven readily adaptable to questions of interfuel substitution and energy/non-energy substitution. Additionally, discrete choice models, particularly the multinomial logit models, have provided a conceptually appealing framework within which to model appliance choice. The third advance has come in both the frequency and sophistication of use of panel data sets, which offer a much richer set of price and income variation. Finally, in the area of energy supply modelling, dynamic optimization models coupled with greater reliance on engineering information has lead to steady improvements in this area.



Estimating Consumer Energy Demand Using International Data: Theoretical and Policy Implications

Dale S. Rothman, J. Ho Hong and Timothy D. Mount

Year: 1994
Volume: Volume15
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol15-No2-4
View Abstract

Abstract:
In this paper, consumer energy demand is estimated as part of a complete demand system using a consistent set of international data on prices, and expenditures for 53 countries ranging from the poorest to the wealthiest. We compare three models: the Translog, the Deaton-Muellbauer Almost Ideal! Demand System (DM), and the Generalized Logit (Logit), and two levels of commodity aggregation (6-good and 9-good). The estimation results indicate that the model specification and level of aggregation are important. The Logit model performs better than the Translog and D-M models which provide illogical! elasticity estimates for many countries. The 9-good model shows that the demand for electricity is significantly more price and income elastic than the demand for primary energy.



Interfuel Substitution within Industrial Companies: An Analysis Based on Panel Data at Company Level

Thomas Bue Bjorner and Henrik Holm Jensen

Year: 2002
Volume: Volume23
Number: Number 2
DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No2-1
View Abstract

Abstract:
In this paper we estimate two models for interfuel substitution between electricity, district heating and (other) fuels using a micro panel data set containing information for most Danish industrial companies in the period between 1983 and 1997. The main finding of the study is that interfuel substitution is low within the companies, especially between electricity and other fuels. The partial own-price elasticities estimated are small (between -0.04 and -0.13) both for electricity and other fuels, while it is between -0.44 and -0.50 for district heating. The partial own-price elasticity for electricity is smaller than generally found in macro studies. One explanation may be that the macro studies, in addition to technical substitution, capture some derived demand effect (i.e., aggregation bias).



The Capital-Energy Controversy: An Artifact of Cost Shares?

Manuel Frondel and Christoph M. Schmidt

Year: 2002
Volume: Volume23
Number: Number 3
DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No3-3
View Abstract

Abstract:
Any serious empirical study of factor substitutability has to allow the data to display complementarity as well as substitutability. The standard approach reflecting this idea is a translog specification-this is also the approach used by the majority of studies analyzing the substitutability of energy and capital. Yet, the substitutability between capital and energy and the source of discrepancies in the results still remain controversial. This paper offers a straightforward explanation for at least the divergent results provided by the translog studies: Using a translog approach reduces the issue of factor substitutability to a question of cost shares. Our review of translog studies demonstrates that this argument is empirically far more relevant than the distinction between time-series and panel studies being favored in the literature. More generally, we provide ample empirical evidence for our argument that the magnitudes of cross price elasticity estimates of two factors gleaned from static approaches like the translog functional form are mainly driven by the cost shares of these factors.




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