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Armington elasticities for energy policy modeling: Evidence from four European countries

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  • Welsch, Heinz

Abstract

Elasticities of substitution among imports and competing domestic production (Armington elasticities) play an important role in computable general equilibrium (CGE) assessments of energy and climate policy. This paper provides estimates of Armington elasticities for 15 commodity groups in four European countries. Since Armington elasticities are found to be rather low on average, researchers may want to reconsider the device of using high values of Armington elasticities in CGE models to avoid unrealistic competitiveness effects or emission leakage rates associated with energy or carbon taxes or other forms of energy-related regulation. Estimated elasticities tend to be higher in the case of machinery and other investment goods than in the case of primary products, ores and chemicals, as well as consumer goods.

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  • Welsch, Heinz, 2008. "Armington elasticities for energy policy modeling: Evidence from four European countries," Energy Economics, Elsevier, vol. 30(5), pages 2252-2264, September.
  • Handle: RePEc:eee:eneeco:v:30:y:2008:i:5:p:2252-2264
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    5. Sauquet, Alexandre & Lecocq, Franck & Delacote, Philippe & Caurla, Sylvain & Barkaoui, Ahmed & Garcia, Serge, 2011. "Estimating Armington elasticities for sawnwood and application to the French Forest Sector Model," Resource and Energy Economics, Elsevier, vol. 33(4), pages 771-781.
    6. Alessandro Antimiani & Valeria Costantini & Chiara Martini & Luca Salvatici, 2011. "Cooperative and non-cooperative solutions to carbon leakage," Departmental Working Papers of Economics - University 'Roma Tre' 0136, Department of Economics - University Roma Tre.
    7. Christoph Böhringer & André Müller, 2014. "Environmental Tax Reforms in Switzerland A Computable General Equilibrium Impact Analysis," Working Papers V-361-14, University of Oldenburg, Department of Economics, revised Jan 2014.
    8. Steinbuks, Jevgenijs & Narayanan, Badri G., 2015. "Fossil fuel producing economies have greater potential for industrial interfuel substitution," Energy Economics, Elsevier, vol. 47(C), pages 168-177.
    9. Stéphanie Monjon & Philippe Quirion, 2010. "Addressing leakage in the EU ETS : Border adjustment or output-based allocation ?," Working Papers hal-00866444, HAL.
    10. Costantini, Valeria & D'Amato, Alessio & Martini, Chiara & Tommasino, Maria Cristina & Valentini, Edilio & Zoli, Mariangela, 2013. "Taxing international emissions trading," Energy Economics, Elsevier, vol. 40(C), pages 609-621.
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    14. Christoph Böhringer & André Müller, 2014. "Environmental Tax Reforms in Switzerland: A Computable General Equilibrium Impact Analysis," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 150(I), pages 1-21, March.
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    20. Németh, Gabriella & Szabó, László & Ciscar, Juan-Carlos, 2011. "Estimation of Armington elasticities in a CGE economy-energy-environment model for Europe," Economic Modelling, Elsevier, vol. 28(4), pages 1993-1999, July.
    21. Olekseyuk, Zoryana & Schürenberg-Frosch, Hannah, 2016. "Are Armington elasticities different across countries and sectors? A European study," Economic Modelling, Elsevier, vol. 55(C), pages 328-342.

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