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The Flexible Ces-Gbc Family Of Cost Functions: Derivation And Application

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  • Asher Tishler
  • Stan Lipovetsky

Abstract

Recent research has indicated that flexible forms do not always generate empirically credible elasticity estimates. In this paper we present a methodology from which we derive a new family of flexible functional forms (denoted by CES-GBC) that are richer in structure than the cost functions in current use. We use the CES-GBC form to estimate the demand for electricity under time-of-use pricing. The estimation results are encouraging. The elasticity estimates are very reasonable and the fit of the estimated equations is far superior than the more commonly used generalized Leontief, generalized square root quadratic, or any other member of the generalized Box-Cox family of cost functions. © 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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  • Asher Tishler & Stan Lipovetsky, 1997. "The Flexible Ces-Gbc Family Of Cost Functions: Derivation And Application," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 638-646, November.
    • Handle: RePEc:tpr:restat:v:79:y:1997:i:4:p:638-646
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    Cited by:

    1. Woo, C.K. & Liu, Y. & Zarnikau, J. & Shiu, A. & Luo, X. & Kahrl, F., 2018. "Price elasticities of retail energy demands in the United States: New evidence from a panel of monthly data for 2001–2016," Applied Energy, Elsevier, vol. 222(C), pages 460-474.
    2. Woo, C.K. & Shiu, A. & Liu, Y. & Luo, X. & Zarnikau, J., 2018. "Consumption effects of an electricity decarbonization policy: Hong Kong," Energy, Elsevier, vol. 144(C), pages 887-902.
    3. Cao, K.H. & Qi, H.S. & Li, R. & Woo, C.K. & Tishler, A. & Zarnikau, J., 2023. "An experiment in own-price elasticity estimation for non-residential electricity demand in the U.S," Utilities Policy, Elsevier, vol. 81(C).
    4. Woo, C.K. & Tishler, A. & Zarnikau, J. & Chen, Y., 2021. "Average residential outage cost estimates for the lower 48 states in the US," Energy Economics, Elsevier, vol. 98(C).
    5. Raymond Li & Chi-Keung Woo & Asher Tishler & Jay Zarnikau, 2022. "Price Responsiveness of Residential Demand for Natural Gas in the United States," Energies, MDPI, vol. 15(12), pages 1-22, June.
    6. Kobi Kagan & Asher Tishler & Avi Weiss, 2005. "On The Use Of Terror Weapons Versus Modern Weapon Systems In An Arms Race Between Developed And Less Developed Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 16(5), pages 331-346.
    7. DeBenedictis, A. & Haley, B. & Woo, C.K. & Cutter, E., 2013. "Operational energy-efficiency improvement of municipal water pumping in California," Energy, Elsevier, vol. 53(C), pages 237-243.
    8. Lipovetsky, Stan & Conklin, Michael, 2014. "Finding items cannibalization and synergy by BWS data," Journal of choice modelling, Elsevier, vol. 12(C), pages 1-9.

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