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(Showing results 1 to 6 of 6)



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
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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.



Identifying the Rebound: Evidence from a German Household Panel

Manuel Frondel, Jorg Peters, and Colin Vance

Year: 2008
Volume: Volume 29
Number: Number 4
DOI: 10.5547/ISSN0195-6574-EJ-Vol29-No4-7
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Abstract:
Using a panel of household travel diary data collected in Germany between 1997 and 2005, this study assesses the effectiveness of fuel efficiency improvements by estimating the rebound effect, which measures the extent to which higher efficiency causes additional travel. Following a theoretical discussion outlining three alternative definitions of the rebound effect, the econometric analysis generates corresponding estimates using panel methods to control for the effects of unobservables that could otherwise produce spurious results. Our results, which range between 57% and 67%, indicate a rebound that is substantially larger than obtained in other studies, calling into question the efficacy of policies targeted at reducing energy consumption via technological efficiency.



Re-Identifying the Rebound: What About Asymmetry?

Manuel Frondel and Colin Vance

Year: 2013
Volume: Volume 34
Number: Number 4
DOI: 10.5547/01956574.34.4.3
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Abstract:
Rebound effects measure the behaviorally induced offset in the reduction of energy consumption following efficiency improvements. Using panel estimation methods and household travel diary data collected in Germany between 1997 and 2009, this study identifies the rebound effect in private transport by allowing for the possibility that fuel price elasticities--from which rebound effects can be derived--are asymmetric. This approach rests on empirical evidence suggesting that the response in individual travel demand to price increases is stronger than to decreases. We argue that such an asymmetric response would require referencing price elasticities derived from price decreases in order to identify the rebound effect, as it represents the response to a decrease in unit cost for car travel due to improved fuel efficiency. Failing to reject the null hypothesis of a symmetric price response, we alternatively estimate a reversible specification and obtain a rebound estimate for single-vehicle households being in the range of 46 to 70%, which is in line with an earlier German study by Frondel, Peters, and Vance (2008).



Germany’s Energiewende: A Tale of Increasing Costs and Decreasing Willingness-To-Pay

Mark A. Andor, Manuel Frondel, and Colin Vance

Year: 2017
Volume: Volume 38
Number: KAPSARC Special Issue
DOI: 10.5547/01956574.38.SI1.mand
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Abstract:
This paper presents evidence that the accumulating cost of Germany's ambitious plan to transform its system of energy provision - the so-called Energiewende - is butting up against consumers' willingness-to-pay (WTP) for it. Following a descriptive presentation that traces the German promotion of renewable energy technologies since 2000, we draw on two stated-preference surveys conducted in 2013 and 2015 that elicit the households' WTP for green electricity. Two models are estimated, one based on a closed-ended question framed around Germany's target of 35% renewable energy in electricity provision by 2020, and the other on an open-ended format that captures changes in WTP over time. To deal with the bias that typifies hypothetical responses, the models distinguish respondents according to whether they express definite certainty in their reported WTP. The results from both models reveal a strong contrast between the households' general acceptance of supporting renewable energy technologies and their own WTP for green electricity.



The U.S. Fracking Boom: Impact on Oil Prices

Manuel Frondel and Marco Horvath

Year: 2019
Volume: Volume 40
Number: Number 4
DOI: 10.5547/01956574.40.4.mfro
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Abstract:
As of late 2008, the steady decline of U.S. crude oil production over the last decades was reversed by the increased adoption of the hydraulic fracturing ("fracking") technology. Adapting the supply-side model proposed by Kaufmann et al. (2004) to assess OPEC's ability to influence real oil prices, this paper investigates the effect of the increase in U.S. oil production due to fracking on world oil prices. Among our key results obtained from (dynamic) OLS estimations, there is a statistically significant negative long-run relationship between increased U.S. oil production and oil prices.



Switching on Electricity Demand Response: Evidence for German Households

Manuel Frondel and Gerhard Kussel

Year: 2019
Volume: Volume 40
Number: Number 5
DOI: 10.5547/01956574.40.5.mfro
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Abstract:
Empirical evidence on households' awareness of electricity prices and potentially divergent demand responses to price changes conditional on price knowledge is scant. Using panel data originating from Germany's Residential Energy Consumption Survey (GRECS), we fill this void by employing an instrumental-variable (IV) approach to cope with the endogeneity of the consumers'tariff choice. By additionally exploiting information on the households'knowledge about power prices, we combine the IV approach with an Endogenous Switching Regression Model to estimate price elasticities for two groups of households, finding that only those households that are informed about prices are sensitive to price changes, whereas the electricity demand of uninformed households is entirely price-inelastic. Based on these results, to curb the electricity consumption of the household sector and its environmental impact, we suggest implementing low-cost information measures on a large scale, such as improving the transparency of tariffs, thereby increasing the saliency of prices.





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