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The impact of energy prices on product innovation: Evidence from the UK refrigerator market

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  • François Cohen
  • Matthieu Glachant
  • Magnus Söderberg

Abstract

This paper uses product-level data from the UK refrigerator market to evaluate the impact of electricity prices on product innovation. Our best estimate is that a 10% increase in the electricity price reduces the average energy consumption of commercialized refrigerator models by 2%. A large share of this reduction is explained by a reduction of freezing space. We also show that the exit of energy-inefficient products contributes more to energy reduction than the launch of new energy-efficient models. These findings suggest that innovation – the development of better technologies embodied in new products – does not respond strongly to energy price variations.

Suggested Citation

  • François Cohen & Matthieu Glachant & Magnus Söderberg, 2017. "The impact of energy prices on product innovation: Evidence from the UK refrigerator market," CIES Research Paper series 50-2017, Centre for International Environmental Studies, The Graduate Institute.
  • Handle: RePEc:gii:ciesrp:cies_rp_51
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    References listed on IDEAS

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    12. Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1999. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 941-975.
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    Cited by:

    1. Francois Cohen and Giulia Valacchi, 2022. "The Heterogeneous Impact of Coal Prices on the Location of Cleaner and Dirtier Steel Plants," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    2. Salim Turdaliev, 2021. "Increasing Block Rate Electricity Pricing and Propensity to Purchase Electrical Appliances: Evidence from a Natural Experiment in Russia," Energies, MDPI, vol. 14(21), pages 1-20, October.
    3. Angelo Maiorino & Adrián Mota-Babiloni & Manuel Gesù Del Duca & Ciro Aprea, 2021. "Scheduling Optimization of a Cabinet Refrigerator Incorporating a Phase Change Material to Reduce Its Indirect Environmental Impact," Energies, MDPI, vol. 14(8), pages 1-17, April.
    4. Francois Cohen & Giulia Valacchi, 2017. "The Heterogeneous Impact of Coal Prices on the Location of Dirty and Clean Steel Plants," CIES Research Paper series 55-2017, Centre for International Environmental Studies, The Graduate Institute.
    5. Lin, Boqiang & Chen, Yufang, 2019. "Does electricity price matter for innovation in renewable energy technologies in China?," Energy Economics, Elsevier, vol. 78(C), pages 259-266.
    6. Mingyue Wang & Yingming Li & Zitong Wang & Junqiang Li, 2022. "The Heterogeneous Relationship between Pollution Charges and Enterprise Green Technology Innovation, Based on the Data of Chinese Industrial Enterprises," Energies, MDPI, vol. 15(5), pages 1-20, February.
    7. Francois Cohen & Giulia Valacchi, 2017. "Do firms innovate if they can relocate? Evidence from te steel industry," CIES Research Paper series 55-2017, Centre for International Environmental Studies, The Graduate Institute.

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    More about this item

    Keywords

    Induced Innovation; Energy Efficiency; Electricity Prices; Multiple Imputations; Product entry and exit.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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