Estimating market power in homogeneous product markets using a composed error model

This study contributes to the literature on estimating market power in homogenous product markets. We estimate a composed error model, where the stochastic part of the firmﾒs pricing equation is formed by two random variable

Modeling Uncertainty in Large Natural Resource Allocation Problems

The productivity of the world's natural resources is critically dependent on a variety of highly uncertain factors, which obscure individual investors and governments that seek to make long-term, sometimes irreversible investments in their exploration and utilization. These dynamic considerations are poorly represented in disaggregated resource models, as incorporating uncertainty into large-dimensional problems presents a challenging computational task. This study introduces a novel numerical method to solve large-scale dynamic stochastic natural resource allocation problems that cannot be addressed by conventional methods. The method is illustrated with an application focusing on the allocation of global land resource use under stochastic crop yields due to adverse climate impacts and limits on further technological progress. For the same model parameters, the range of land conversion is considerably smaller for the dynamic stochastic model as compared to deterministic scenario analysis. The scenario analysis can thus significantly overstate the magnitude of expected land conversion under uncertain crop yields

Interfuel Substitution and Energy Use in the U.K. Manufacturing Sector

This paper investigates interfuel substitution, separately accounting for different types of energy use in the U.K. manufacturing sector. Econometric models of interfuel substitution are applied to aggregate energy use, as well as to a specific energy use process--thermal heating--where interfuel substitution is technologically feasible. Compared to the aggregate data, the estimated own-price elasticities for all fuels and the cross-price elasticities for fossil fuels are considerably higher for thermal heating processes. Nonetheless, electricity is found to be a poor substitute for other fuels based on both aggregate data and, separately, for the heating process. An increase in real fuel prices from the Climate Change Levy in 2001 resulted in higher substitution elasticities based on aggregate data, and lower substitution elasticities for the thermal heating process. The results of a counterfactual decomposition of change in the estimated elasticities indicate that technological change was the major determinant of the differences in observed elasticities before and after the energy price increase.

E P R G W O R K I N G P A P E R The Effect of Energy Prices on Operation and Investment in OECD Countries: Evidence from the Vintage Capital Model EPRG Working Paper 0922 Cambridge Working Paper in Economics 0933 The E¤ect of Energy Prices on Operation an

This paper analyzes the effect of energy prices on energy efficiency, separately accounting for operational and investment choices in different sectors. For this purpose, capital stock is characterised by vintages with different intensities of energy use, calculated as a function of exogenously-evolving technology availability and energy prices. Our model separately accounts for substitution between inputs to for production (labour, energy and materials), and the potential for more efficient use of these inputs by choosing more efficient technologies at the time of investment. The model is estimated for 23 OECD countries across four sectors, and their respective prices for final energy consumption over the period [1990][1991][1992][1993][1994][1995][1996][1997][1998][1999][2000][2001][2002][2003][2004][2005]. Vintage representation of capital stock significantly improves the explanatory value of the model at the sector level. Our results imply that rising energy costs result in substantial decline in energy use in the long-run. Abstract This paper analyzes the e¤ect of energy prices on energy e¢ ciency, separately accounting for operational and investment choices in di¤erent sectors. For this purpose, capital stock is characterised by vintages with di¤erent intensities of energy use, calculated as a function of exogenously-evolving technology availability and energy prices. Our model incorporates both possibility of substitution between inputs for production (labour, energy and materials), and the potential for more e¢ cient use of these inputs by choosing more e¢ cient technologies at the time of investment. The model is estimated for 23 OECD countries across four sectors, and their respective prices for …nal energy consumption over the period 1990-2005. Vintage representation of capital stock signi…cantly improves the explanatory value of the model at the sector level. Our results imply that rising energy costs result in substantial decline in energy use in the long-run

E P R G W O R K I N G P A P E R The Effect of Energy Prices on Operation and Investment in OECD Countries: Evidence from the Vintage Capital Model EPRG Working Paper 0922 Cambridge Working Paper in Economics 0933 The E¤ect of Energy Prices on Operation an

This paper analyzes the effect of energy prices on energy efficiency, separately accounting for operational and investment choices in different sectors. For this purpose, capital stock is characterised by vintages with different intensities of energy use, calculated as a function of exogenously-evolving technology availability and energy prices. Our model separately accounts for substitution between inputs to for production (labour, energy and materials), and the potential for more efficient use of these inputs by choosing more efficient technologies at the time of investment. The model is estimated for 23 OECD countries across four sectors, and their respective prices for final energy consumption over the period [1990][1991][1992][1993][1994][1995][1996][1997][1998][1999][2000][2001][2002][2003][2004][2005]. Vintage representation of capital stock significantly improves the explanatory value of the model at the sector level. Our results imply that rising energy costs result in substantial decline in energy use in the long-run. Abstract This paper analyzes the e¤ect of energy prices on energy e¢ ciency, separately accounting for operational and investment choices in di¤erent sectors. For this purpose, capital stock is characterised by vintages with di¤erent intensities of energy use, calculated as a function of exogenously-evolving technology availability and energy prices. Our model separately accounts for substitution between inputs for production (labour, energy and materials), and the potential for more e¢ cient use of these inputs by choosing more e¢ cient technologies at the time of investment. The model is estimated for 23 OECD countries across four sectors, and their respective prices for …nal energy consumption over the period 1990-2005. Vintage representation of capital stock signi…cantly improves the explanatory value of the model at the sector level. Our results imply that rising energy costs result in substantial decline in energy use in the long-run