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Energy Prices and the Adoption of Energy‐Saving Technology

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  • Joshua Linn

Abstract

This article investigates the link between factor prices, technology and factor demands. Using plant‐level data from the Census of Manufactures, I compare the energy intensity of entrants and incumbents from 1967–97. A 10% increase in the price of energy reduces the relative energy intensity of entrants by 1%. The estimate implies that technology adoption by incumbents explains a statistically significant but relatively small fraction of changes in aggregate energy demand in the 1970s and 1980s. Furthermore, entrants’ technology adoption can reduce the long run effect of energy prices on growth, but by less than previous research has found.

Suggested Citation

  • Joshua Linn, 2008. "Energy Prices and the Adoption of Energy‐Saving Technology," Economic Journal, Royal Economic Society, vol. 118(533), pages 1986-2012, November.
  • Handle: RePEc:wly:econjl:v:118:y:2008:i:533:p:1986-2012
    DOI: 10.1111/j.1468-0297.2008.02199.x
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