IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v26y2005i2p1-21.html
   My bibliography  Save this article

Price Asymmetry In Energy Demand Models: A Proxy for Energy-Saving Technical Change?

Author

Listed:
  • James M. Griffin
  • Craig T. Schulman

Abstract

It has become fashionable to believe that energy and oil demand respond asymmetrically to price increases and decreases. Unfortunately, the asymmetric price model utilized by Gately and others has the unintended by-product of producing intercept shifts in the demand function purely in response to price volatility. Thus what is in fact energy saving technical change is attributed to price asymmetry. The two become observationally equivalent. Furthermore, the asymmetric price model has the peculiarity of being dependent on the starting point of the data period so that parameter estimates are not robust across different sample periods. We demonstrate empirically using a panel of OECD countries for oil and energy demand that symmetric price responses cannot be rejected after explicitly controlling for energy saving technical change within a fixed effects model.

Suggested Citation

  • James M. Griffin & Craig T. Schulman, 2005. "Price Asymmetry In Energy Demand Models: A Proxy for Energy-Saving Technical Change?," The Energy Journal, , vol. 26(2), pages 1-21, April.
    • Handle: RePEc:sae:enejou:v:26:y:2005:i:2:p:1-21
    DOI: 10.5547/ISSN0195-6574-EJ-Vol26-No2-1
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/ISSN0195-6574-EJ-Vol26-No2-1
    Download Restriction: no
    File URL: https://libkey.io/10.5547/ISSN0195-6574-EJ-Vol26-No2-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Rudolf Wolffram, 1971. "Positivistic Measures of Aggregate Supply Elasticities: Some New Approaches—Some Critical Notes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 53(2), pages 356-359.
    2. Dermot Gately & Hillard G. Huntington, 2002. "The Asymmetric Effects of Changes in Price and Income on Energy and Oil Demand," The Energy Journal, , vol. 23(1), pages 19-55, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bashmakov, Igor & Grubb, Michael & Drummond, Paul & Lowe, Robert & Myshak, Anna & Hinder, Ben, 2024. "“Minus 1” and energy costs constants: Empirical evidence, theory and policy implications," Structural Change and Economic Dynamics, Elsevier, vol. 71(C), pages 95-115.
    2. Xu, Jiangchuan & Wang, En-Ze, 2024. "The path to energy savings and CO2 emission reductions in China's industrial sector from the perspective of factor price distortions correction - Based on an extended capital vintage model," Energy, Elsevier, vol. 313(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huntington, Hillard G., 2004. "Shares, gaps and the economy's response to oil disruptions," Energy Economics, Elsevier, vol. 26(3), pages 415-424, May.
    2. Fedoseeva, Svetlana & Zeidan, Rodrigo, 2018. "How (a)symmetric is the response of import demand to changes in its determinants? Evidence from European energy imports," Energy Economics, Elsevier, vol. 69(C), pages 379-394.
    3. Hyeyoung Kim & Marisa Zansler & Lisa A. House, 2018. "Retail promotion with price cut and the imperfect price responses of orange juice demand in the U.S," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 363-376, March.
    4. Adeyemi, Olutomi I. & Hunt, Lester C., 2007. "Modelling OECD industrial energy demand: Asymmetric price responses and energy-saving technical change," Energy Economics, Elsevier, vol. 29(4), pages 693-709, July.
    5. Huntington, Hillard G., 2024. "US gasoline response to vehicle fuel efficiency: A contribution to the direct rebound effect," Energy Economics, Elsevier, vol. 136(C).
    6. Manuel Frondel & Colin Vance, 2013. "Re-Identifying the Rebound: What About Asymmetry?," The Energy Journal, , vol. 34(4), pages 43-54, October.
    7. Manuel Frondel & Colin Vance, 2011. "Re-Identifying the Rebound – What About Asymmetry?," Ruhr Economic Papers 0276, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Roel Jongeneel & Ana Gonzalez-Martinez, 2022. "EU Dairy after the Quota Abolition: Inelastic Asymmetric Price Responsiveness and Adverse Milk Supply during Crisis Time," Agriculture, MDPI, vol. 12(12), pages 1-16, November.
    9. Reza Darisavi Bahmanshir & Ali Akbar Naji Meidani & Mahdi Khodaparast Mashhadi & Narges Salehnia, 2018. "Reversibility Test of Oil Demand Function of OECD Countries Importing Oil from Iran with an Emphasis on Technological and Environmental Considerations: Symmetric and Asymmetric Models," International Journal of Energy Economics and Policy, Econjournals, vol. 8(2), pages 132-139.
    10. Frondel, Manuel & Vance, Colin, 2013. "Re-Identifying the Rebound: What About Asymmetry?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 34(4), pages 42-54.
    11. Wadud, Zia, 2014. "The asymmetric effects of income and fuel price on air transport demand," Transportation Research Part A: Policy and Practice, Elsevier, vol. 65(C), pages 92-102.
    12. Adeyemi, Olutomi I. & Hunt, Lester C., 2014. "Accounting for asymmetric price responses and underlying energy demand trends in OECD industrial energy demand," Energy Economics, Elsevier, vol. 45(C), pages 435-444.
    13. repec:zbw:rwirep:0276 is not listed on IDEAS
    14. Wadud, Zia, 2015. "Imperfect reversibility of air transport demand: Effects of air fare, fuel prices and price transmission," Transportation Research Part A: Policy and Practice, Elsevier, vol. 72(C), pages 16-26.
    15. Sharimakin, Akinsehinwa, 2021. "Modelling asymmetric price responses of industrial energy demand with a dynamic hierarchical model," Energy Economics, Elsevier, vol. 98(C).
    16. Gangopadhyay, Partha & Shankar, Sriram, 2016. "Energy efficiency in the ACI (ASEAN-China-India) countries: is there room for regional policy coordination?," International Journal of Development and Conflict, Gokhale Institute of Politics and Economics, vol. 6(2), pages 121-135.
    17. Leach, Andrew & Mason, Charles F. & Veld, Klaas van ‘t, 2011. "Co-optimization of enhanced oil recovery and carbon sequestration," Resource and Energy Economics, Elsevier, vol. 33(4), pages 893-912.
    18. Islam Hassouneh & Teresa Serra & José M. Gil, 2010. "Price transmission in the Spanish bovine sector: the BSE effect," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 33-42, January.
    19. Michel Simioni & Frédéric Gonzales & Patrice Guillotreau & Laurent Le Grel, 2013. "Detecting Asymmetric Price Transmission with Consistent Threshold along the Fish Supply Chain," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 61(1), pages 37-60, March.
    20. Sentenac-Chemin, Elodie, 2012. "Is the price effect on fuel consumption symmetric? Some evidence from an empirical study," Energy Policy, Elsevier, vol. 41(C), pages 59-65.
    21. Ansgar Belke & Daniel Gros, 2014. "A simple model of an oil based global savings glut—the “China factor”and the OPEC cartel," International Economics and Economic Policy, Springer, vol. 11(3), pages 413-430, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:26:y:2005:i:2:p:1-21. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.