Simulated maximum likelihood estimation of demand systems with corner solutions and panel data application to industrial energy demand
AbstractThis paper proposes a convenient method for evaluating energy price elasticities, when firms may switch between energy regimes. The methodology involves estimation of an energy demand system that explicitly deals with the zero expenditures problem, while allowing for unobserved heterogeneity. We apply a Simulated Maximum Likelihood technique for estimating a simultaneous equation energy demand system in the French pulp and paper sector, over the period1983-1996. Endogenous regime transitions are accounted for when computing energy price elasticities. Our estimates are used to predict the outcome of an environmental policy aimed at reducing CO2 emissions in the paper and pulp industry.
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Bibliographic InfoArticle provided by Dalloz in its journal Revue d'économie politique.
Volume (Year): Volume 113 (2003)
Issue (Month): 6 ()
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Web page: http://www.cairn.info/revue-d-economie-politique.htm
simulated maximum likelihood; non-negativity constraints; energy demand estimation;
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