Interfuel Substitution: A Meta-Analysis
AbstractInterfuel substitutability has been of longstanding interest to energy economists and policy makers. However, there has been no quantitative meta-analysis of this literature. This research report fills this gap by analysing a broad sample of studies of interfuel substitution in the industrial sector, manufacturing industry or sub-industries, and macro-economy of a variety of developed and developing economies. The primary study sample size has been included in the meta-regression to control for publication bias. At the industrial level, results for the shadow elasticities of substitution between coal, oil, gas, and electricity for forty-six primary studies show that, except for gas-electricity and coal-electricity, there are easy substitution possibilities between all the fuel pairs. Substitution possibilities seem more constrained at the macro level and less constrained in sub-industries. Estimates also vary across countries. Publication bias does not appear to be present, but model and data specification issues very significantly affect the estimates derived by each individual study. Estimates from cross-section regressions are generally largest, and fixed effects panel estimates are intermediate. Time-series estimates are mostly much smaller. Econometric research suggests that the fixed effects estimates, although biased downwards, are likely to be the best among the existing studies.
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Bibliographic InfoPaper provided by Australian National University, Environmental Economics Research Hub in its series Research Reports with number 94882.
Date of creation: Jun 2009
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Meta-analysis; energy; substitution; elasticity; interfuel; Environmental Economics and Policy; Resource /Energy Economics and Policy; D24; Q40;
Other versions of this item:
- David I.Stern, 2009. "Interfuel Substitution: A Meta Analysis," Environmental Economics Research Hub Research Reports 0933, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
- David I. Stern, 2009. "Interfuel Substitution: A Meta-Analysis," Departmental Working Papers 2009-06, The Australian National University, Arndt-Corden Department of Economics.
- Stern, David I., 2009. "Interfuel Substitution: A Meta-Analysis," MPRA Paper 13734, University Library of Munich, Germany.
- Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
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