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Energy Efficiency in Swedish Industry A Stochastic Frontier Approach

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Abstract

This paper estimates firm level energy efficiency and its determinants in 14 sectors of Swedish manufacturing by using stochastic frontier analysis (SFA). We derive energy demand frontiers both from cost minimizing and profit maximizing perspectives. To account for firms’ heterogeneity, Greene’s true random effects model is adopted. Results show that, from both firm behavior perspectives, there is room to improve energy efficiency in all sectors of Swedish manufacturing. The EU ETS seem to have had a moderate or no effect on Swedish firms’ efficient use of energy. Moreover, we found that energy intensity or energy productivity (energy use over production value) is not an appropriate proxy for energy efficiency.

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  • Lundgren, Tommy & Marklund, Per-Olov & Zhang, Shanshan, 2014. "Energy Efficiency in Swedish Industry A Stochastic Frontier Approach," CERE Working Papers 2014:9, CERE - the Center for Environmental and Resource Economics.
  • Handle: RePEc:hhs:slucer:2014_009
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    File URL: http://www.cere.se/se/forskning/publikationer/578-the-economy-wide-rebound-effect-from-improved-energy-efficiency-in-swedish-industries-a-general-equilibrium-analysis.html
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    Cited by:

    1. Zhang, Shanshan & Lundgren, Tommy & Zhou, Wenchao, 2016. "Energy efficiency in Swedish industry," Energy Economics, Elsevier, vol. 55(C), pages 42-51.

    More about this item

    Keywords

    energy demand; energy efficiency; manufacturing; stochastic frontier analysis; true random effects;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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