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The Economics of Conserved-Energy "Supply" Curves

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  • Steven E. Stoft

Abstract

This paper develops the theoretical underpinnings of conservation "supply " curves (CSCs), and in doing so uncovers several problems with current procedures for their construction. The CSC is shown to be derivable from a production isoquant, and not to be a true supply curve. The traditional algorithm for constructing a CSC from discrete measures is shown to be suboptimal, contrary to prior claims. Omitting conservation measuresfrom consideration can lead to systematic, excessive conservation. The CSC concept is extended from constant-service to constant-utility measures, and an improved approximation is suggested for the cost of conserved energy (CCE) of measures that cause rebound. The appendix provides a formula for CCE that is simple yet more general than the one currently in use, but shows that even with this generalization, CSCs cannot be constructed for a world with fluctuating energy prices.

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  • Steven E. Stoft, 1995. "The Economics of Conserved-Energy "Supply" Curves," The Energy Journal, , vol. 16(4), pages 109-137, October.
    • Handle: RePEc:sae:enejou:v:16:y:1995:i:4:p:109-137
    DOI: 10.5547/ISSN0195-6574-EJ-Vol16-No4-5
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    References listed on IDEAS

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    1. Blumstein, Carl & Stoft, Steven E, 1995. "Technical efficiency, production functions and conservation supply curves," Energy Policy, Elsevier, vol. 23(9), pages 765-768, September.
    2. Paul L. Joskow & Donald B. Marron, 1992. "What Does a Negawatt Really Cost? Evidence from Utility Conservation Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 41-74.
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