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The impact of energy prices on product innovation: Evidence from the UK refrigerator market

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  • François Cohen
  • Matthieu Glachant
  • Magnus Söderberg

Abstract

This paper uses product-level data from the UK refrigerator market to evaluate the impact of electricity prices on product innovation. Our best estimate is that a 10% increase in the electricity price reduces the average energy consumption of commercialized refrigerator models by 2%. A large share of this reduction is explained by a reduction of freezing space. We also show that the exit of energy-inefficient products contributes more to energy reduction than the launch of new energy-efficient models. These findings suggest that innovation – the development of better technologies embodied in new products – does not respond strongly to energy price variations.

Suggested Citation

  • François Cohen & Matthieu Glachant & Magnus Söderberg, 2017. "The impact of energy prices on product innovation: Evidence from the UK refrigerator market," CIES Research Paper series 50-2017, Centre for International Environmental Studies, The Graduate Institute.
  • Handle: RePEc:gii:ciesrp:cies_rp_51
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    References listed on IDEAS

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    Cited by:

    1. Lin, Boqiang & Chen, Yufang, 2019. "Does electricity price matter for innovation in renewable energy technologies in China?," Energy Economics, Elsevier, vol. 78(C), pages 259-266.
    2. François Cohen; Giulia Valacchi, 2020. "The Heterogeneous Impact of Coal Prices on the Location of Cleaner and Dirtier Steel Plants," CIES Research Paper series 65-2020, Centre for International Environmental Studies, The Graduate Institute.
    3. Francois Cohen & Giulia Valacchi, 2017. "Do firms innovate if they can relocate? Evidence from te steel industry," CIES Research Paper series 55-2017, Centre for International Environmental Studies, The Graduate Institute.
    4. Francois Cohen & Giulia Valacchi, 2017. "The Heterogeneous Impact of Coal Prices on the Location of Dirty and Clean Steel Plants," CIES Research Paper series 55-2017, Centre for International Environmental Studies, The Graduate Institute.

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    More about this item

    Keywords

    Induced Innovation; Energy Efficiency; Electricity Prices; Multiple Imputations; Product entry and exit.;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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