Energy-saving Technology Adoption under Uncertainty in the Residential Sector
Home renovation is generally asserted to be a highly effective means for households to lower expenditures on energy. In this sense, home renovation can also be thought as a means to reduce GHG emissions. In this paper we consider a homeowner who makes an irreversible energy-saving investment in an uncertain environment. In a general equilibrium framework, we solve the program of a representative consumer who uses his wealth to invest in the energy-saving technology, to save or to consume energy goods and non-energy goods. Resolution is analytical in a zero discounting case and numerical for the general case, based on collocation and Chebyshev polynomials. In particular, we show that the usual explanation of the energy paradox based on the existence of an option value in partial equilibrium is no longer valid when the analysis is extended to a general equilibrium framework.
Volume (Year): (2011)
Issue (Month): 103-104 ()
|Contact details of provider:|| Postal: 3, avenue Pierre Larousse, 92245 Malakoff Cedex|
Web page: https://annals.ensae.fr/
More information through EDIRC
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.:
- Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
- Hassett, Kevin A. & Metcalf, Gilbert E., 1993. "Energy conservation investment : Do consumers discount the future correctly?," Energy Policy, Elsevier, vol. 21(6), pages 710-716, June.
- Pommeret, Aude & Schubert, Katheline, 2009.
"Abatement Technology Adoption Under Uncertainty,"
Cambridge University Press, vol. 13(04), pages 493-522, September.
- Aude Pommeret & Katheline Schubert, 2009. "Abatement technology adoption under uncertainty," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00308797, HAL.
- Kenneth L. Judd, 1998. "Numerical Methods in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262100711, January.
- Ansar, Jasmin & Sparks, Roger, 2009. "The experience curve, option value, and the energy paradox," Energy Policy, Elsevier, vol. 37(3), pages 1012-1020, March.
- Smith, William & Son, Young Seob, 2005. "Can the desire to conserve our natural resources be self-defeating?," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 52-67, January.
- Judd, Kenneth L., 1992. "Projection methods for solving aggregate growth models," Journal of Economic Theory, Elsevier, vol. 58(2), pages 410-452, December.
- Banfi, Silvia & Farsi, Mehdi & Filippini, Massimo & Jakob, Martin, 2008. "Willingness to pay for energy-saving measures in residential buildings," Energy Economics, Elsevier, vol. 30(2), pages 503-516, March.
- Silvia Banfi & Mehdi Farsi & Massimo Filippini & Martin Jakob, 2005. "Willingness to Pay for Energy-Saving Measures in Residential Buildings," CEPE Working paper series 05-41, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Adam B. Jaffe & Robert N. Stavins, 1994. "Energy-Efficiency Investments and Public Policy," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 43-66.
- Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy-efficiency gap What does it mean?," Energy Policy, Elsevier, vol. 22(10), pages 804-810, October.
- Hassett, Kevin A. & Metcalf, Gilbert E., 1995. "Energy tax credits and residential conservation investment: Evidence from panel data," Journal of Public Economics, Elsevier, vol. 57(2), pages 201-217, June.
- Dangl, Thomas & Wirl, Franz, 2004. "Investment under uncertainty: calculating the value function when the Bellman equation cannot be solved analytically," Journal of Economic Dynamics and Control, Elsevier, vol. 28(7), pages 1437-1460, April.
- Smith, William T., 1996. "Feasibility and transversality conditions for models of portfolio choice with non-expected utility in continuous time," Economics Letters, Elsevier, vol. 53(2), pages 123-131, November. Full references (including those not matched with items on IDEAS)