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A Dynamic Analysis of Interfuel Substitution for Swedish Heating Plants

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Author Info
Brännlund, Runar () (Department of Economics, Umeå University)
Lundgren, Tommy () (Department of Forest Economics)

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Abstract

This paper estimates a dynamic model of interfuel substitution for Swedish heating plants. We use the cost share linear logit model developed by Considine and Mount (1984). All estimated own-price elasticities are negative and all cross-price elasticities are positive. The estimated dynamic adjustment rate parameter is small, however increasing with the size of the plant and time, indicating fast adjustments in the fuel mix when changing relative fuel prices. The estimated model is used to illustrate the effects of two different policy changes.

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Publisher Info
Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 550.

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Length: 26 pages
Date of creation: 11 Jan 2001
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Handle: RePEc:hhs:umnees:0550

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Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
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Web page: http://www.econ.umu.se/
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Related research
Keywords: Interfuel substitution; linear-logit; biofuel; wood fuel; adjustment cost;

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Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply
Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Caves, Douglas W & Christensen, Laurits R, 1980. "Global Properties of Flexible Functional Forms," American Economic Review, American Economic Association, vol. 70(3), pages 422-32, June. [Downloadable!] (restricted)
  2. Atkinson, Scott E & Kerkvliet, Joe, 1989. "Dual Measures of Monopoly and Monopsony Power: An Application to Regulated Electric Utilities," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 250-57, May. [Downloadable!] (restricted)
  3. Treadway, Arthur B, 1971. "The Rational Multivariate Flexible Accelerator," Econometrica, Econometric Society, vol. 39(5), pages 845-55, September. [Downloadable!] (restricted)
  4. Jones, Clifton T, 1995. "A Dynamic Analysis of Interfuel Substitution in U.S. Industrial Energy Demand," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(4), pages 459-65, October.
  5. Bopp, Anthony E. & Costello, David, 1990. "The economics of fuel choice at US electric utilities," Energy Economics, Elsevier, vol. 12(2), pages 82-88, April. [Downloadable!] (restricted)
  6. P. L. Joskow & F. S. Mishkin, 1974. "Electric Utility Fuel Choice Behavior in the United States," Working papers 143, Massachusetts Institute of Technology (MIT), Department of Economics.
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  7. Brännlund, Runar & Kriström, Bengt, 1999. "Too Hot to Handle? Benefits and costs of stimulating the use of biofuels in the Swedish Heating Sector," UmeÃ¥ Economic Studies 518, Umeå University, Department of Economics. [Downloadable!]
  8. Robert S. Pindyck, 1979. "The Structure of World Energy Demand," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262661772, December.
  9. Considine, Timothy J, 1990. "Symmetry Constraints and Variable Returns to Scale in Logit Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 8(3), pages 347-53, July.
  10. Treadway, Arthur B., 1974. "The globally optimal flexible accelerator," Journal of Economic Theory, Elsevier, vol. 7(1), pages 17-39, January. [Downloadable!] (restricted)
  11. Considine, Timothy J., 1989. "Separability, functional form and regulatory policy in models of interfuel substitution," Energy Economics, Elsevier, vol. 11(2), pages 82-94, April. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Brännlund, Runar & Lundgren, Tommy, 2006. "Swedish Industry and Kyoto An Assessment of the Effects of the European CO2 Emission Permit Trading System," Working Paper Series 06/01, Swedish University of Agricultural Sciences, Department of Forest Economics. [Downloadable!]
    Other versions:
  2. Hammar, Henrik & Lundgren, Tommy & Sjöström, Magnus, 2006. "The significance of transport costs in the Swedish forest industry," Working Paper 97, National Institute of Economic Research.
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