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The Empirical Assessment of Technology Differences: Comparing the Comparable

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  • Manuel Frondel

    (RWI Essen)

  • Christoph M. Schmidt

    (RWI Essen, Ruhr University Bochum, and CEPR London)

Abstract

Since the first statement of Hicks's induced innovation hypothesis in 1932, a large number of theoretical and empirical studies have analyzed the issue of price-induced technological change-many of them on the basis of substitution elasticities. This note compares technologies across space and time on the basis of factual and counterfactual substitution elasticities and argues that differences in estimated substitution elasticities should be decomposed into two counterfactual components. The first component is designed to indicate how the ease of substitution is altered by varied economic circumstances; the second addresses the question of how technologies would compare under genuinely comparable situations. This argument is illustrated by the example of energy-price elasticities of capital before and after the oil crisis of the early 1970s. © 2006 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 88 (2006)
Issue (Month): 1 (February)
Pages: 186-192

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Handle: RePEc:tpr:restat:v:88:y:2006:i:1:p:186-192

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  1. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, Elsevier, vol. 61(1), pages 5-21, March.
  2. Manuel Frondel & Christoph M. Schmidt, 2002. "The Capital-Energy Controversy: An Artifact of Cost Shares?," The Energy Journal, International Association for Energy Economics, International Association for Energy Economics, vol. 0(Number 3), pages 53-79.
  3. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
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Cited by:
  1. Behl, Peter & Dette, Holger & Frondel, Manuel & Tauchmann, Harald, 2012. "Choice is suffering: A Focused Information Criterion for model selection," Economic Modelling, Elsevier, Elsevier, vol. 29(3), pages 817-822.
  2. Christoph M. Schmidt, 2007. "Policy Evaluation and Economic Policy Advice," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0001, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  3. Manuel Frondel & Christoph M. Schmidt, 2008. "Measuring Energy Security – A Conceptual Note," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0052, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  4. Manuel Frondel & Christoph M. Schmidt, 2006. "On the Restrictiveness of Separability: The Significance of Energy in German Manufacturing," RWI Discussion Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung 0038, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  5. Ronald Backmann & Thomas K. Bauer & Jochen Kluve & Sandra Schaffner & Christoph M. Schmidt, 2008. "Mindestlöhne in Deutschland - Beschäftigungswirkungen und fiskalische Effekte," RWI Materialien, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 56, 05.
  6. Peter Behl & Holger Dette & Manuel Frondel & Harald Tauchmann, 2011. "Being Focused: When the Purpose of Inference Matters for Model Selection," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0264, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  7. Frondel, Manuel & Schmidt, Christoph M. & Vance, Colin, 2011. "A regression on climate policy: The European Commission’s legislation to reduce CO2 emissions from automobiles," Transportation Research Part A: Policy and Practice, Elsevier, Elsevier, vol. 45(10), pages 1043-1051.
  8. Behl, Peter & Dette, Holger & Frondel, Manuel & Tauchmann, Harald, 2013. "Energy substitution: When model selection depends on the focus," Energy Economics, Elsevier, Elsevier, vol. 39(C), pages 233-238.
  9. Frondel, Manuel, 2011. "Modelling energy and non-energy substitution: A brief survey of elasticities," Energy Policy, Elsevier, Elsevier, vol. 39(8), pages 4601-4604, August.
  10. Manuel Frondel & Peter Behl & Holger Dette & Harald Tauchmann, 2011. "Choice is Suffering: A Focused Information Criterion for Model Selection Activation Program for Disadvantaged Youths," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0250, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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