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Validating Allocation Functions in Energy Models: A Comment

Abstract:
In their recent paper, Smith and Hill (1985) perform a numerical experiment to compare three allocation functions: translog, logistic, and probabilistic. They found that the logistic function was generally better than the other two alternatives and that the probabilistic function was distinctly inferior to other methods in nearly all experiments. They observe that the probabilistic function has wide application in energy models and hope that their paper may dampen the enthusiasm for the probabilistic function.

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Energy Specializations: Energy Modeling – Other

JEL Codes: C51: Model Construction and Estimation, Q40: Energy: General, D24: Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity, Q41: Energy: Demand and Supply; Prices, C58: Financial Econometrics

Keywords: Allocation functions, Energy models

DOI: 10.5547/ISSN0195-6574-EJ-Vol8-No1-11

Published in Volume 8, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.

 

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