IDEAS home Printed from https://ideas.repec.org/p/uto/dipeco/201203.html
   My bibliography  Save this paper

Residential Energy Demand: a Multiple Discrete-Continuous Extreme Value Model using Italian Expenditure Data

Author

Listed:

Abstract

The economic analysis of energy consumption is mostly focused on single components of total expenditure in energy-consuming services. The discrete-continuous models, following the formulation of Hanemann (1984), consider the case of perfect substitute goods: the maximization process leads to extreme corner solutions in which only one alternative is selected. According to this model the literature on energy consumption is limited to study some components of total energy consumption, i.e. space and water heating or transportation. Following the path opened by Pinjari and Bhat (2010), the goal of this paper is to build a multiple discrete-continuous model of residential energy demand based on Italian expenditure data. A non-linear utility structure, originally used in Kim et al. (2002) and extended in Bhat (2005), is implemented within the Kuhn-Tucker multiple-discrete economic model of consumer demand proposed by Wales and Woodland (1983). The paper here presented is the first application of this model to Italian expenditure data. The model predict parameters stability over time and low price elasticities for electricity (0.56) and natural gas (1.17). Considerble variations in natural gas expenditures (+54%) are predicted in case of climate changes measured of increases in Heating Degree Days (+15%).

Suggested Citation

  • Frontuto Vito, 2012. "Residential Energy Demand: a Multiple Discrete-Continuous Extreme Value Model using Italian Expenditure Data," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201203, University of Turin.
    • Handle: RePEc:uto:dipeco:201203
    as

    Download full text from publisher

    File URL: http://www.est.unito.it/do/home.pl/Download?doc=/allegati/wp2012dip/3_wp_frontuto.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jean-Thomas Bernard & Denis Bolduc & Donald Belanger, 1996. "Quebec Residential Electricity Demand: A Microeconometric Approach," Canadian Journal of Economics, Canadian Economics Association, vol. 29(1), pages 92-113, February.
    2. Enrica De Cian & Elisa Lanzi & Roberto Roson, 2007. "The Impact of Temperature Change on Energy Demand: A Dynamic Panel Analysis," Working Papers 2007.46, Fondazione Eni Enrico Mattei.
    3. Nesbakken, Runa, 2001. " Energy Consumption for Space Heating: A Discrete-Continuous Approach," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(1), pages 165-184, March.
    4. Nevo, Aviv, 2001. "Measuring Market Power in the Ready-to-Eat Cereal Industry," Econometrica, Econometric Society, vol. 69(2), pages 307-342, March.
    5. Vaage, Kjell, 2000. "Heating technology and energy use: a discrete/continuous choice approach to Norwegian household energy demand," Energy Economics, Elsevier, vol. 22(6), pages 649-666, December.
    6. Rudolf K.-H. Dennerlein, 1987. "Residential Demand for Electrical Appliances and Electricity in the Federal Republic of Germany," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 69-86.
    7. Bigano, Andrea & Bosello, Francesco & Marano, Giuseppe, 2006. "Energy Demand and Temperature: A Dynamic Panel Analysis," International Energy Markets Working Papers 12117, Fondazione Eni Enrico Mattei (FEEM).
    8. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74(2), pages 132-132.
    9. Halvorsen, Bente & Larsen, Bodil M., 2001. "The flexibility of household electricity demand over time," Resource and Energy Economics, Elsevier, vol. 23(1), pages 1-18, January.
    10. Hanemann, W Michael, 1984. "Discrete-Continuous Models of Consumer Demand," Econometrica, Econometric Society, vol. 52(3), pages 541-561, May.
    11. Wales, T. J. & Woodland, A. D., 1983. "Estimation of consumer demand systems with binding non-negativity constraints," Journal of Econometrics, Elsevier, vol. 21(3), pages 263-285, April.
    12. Dubin, Jeffrey A & McFadden, Daniel L, 1984. "An Econometric Analysis of Residential Electric Appliance Holdings and Consumption," Econometrica, Econometric Society, vol. 52(2), pages 345-362, March.
    13. Bhat, Chandra R., 2005. "A multiple discrete-continuous extreme value model: formulation and application to discretionary time-use decisions," Transportation Research Part B: Methodological, Elsevier, vol. 39(8), pages 679-707, September.
    14. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
    15. Larsen, Bodil Merethe & Nesbakken, Runa, 2004. "Household electricity end-use consumption: results from econometric and engineering models," Energy Economics, Elsevier, vol. 26(2), pages 179-200, March.
    16. Cameron, Trudy Ann, 1985. "A Nested Logit Model of Energy Conservation Activity by Owners of Existing Single Family Dwellings," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 205-211, May.
    Full references (including those not matched with items on IDEAS)

    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. Nicholas Rivers and Leslie Shiell, 2016. "Free-Riding on Energy Efficiency Subsidies: the Case of Natural Gas Furnaces in Canada," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    2. Xavier Labandeira & José M. Labeaga & Xiral López-Otero, 2011. "Energy Demand for Heating in Spain: An Empirical Analysis with Policy Purposes," Working Papers 06-2011, Economics for Energy.
    3. Michael Hanemann & Xavier Labandeira & José M. Labeaga, 2013. "Energy Demand for Heating: Short Run and Long Run," Working Papers 07-2013, Economics for Energy.
    4. Pinjari, Abdul Rawoof & Bhat, Chandra, 2021. "Computationally efficient forecasting procedures for Kuhn-Tucker consumer demand model systems: Application to residential energy consumption analysis," Journal of choice modelling, Elsevier, vol. 39(C).
    5. Li, Jia & Just, Richard E., 2018. "Modeling household energy consumption and adoption of energy efficient technology," Energy Economics, Elsevier, vol. 72(C), pages 404-415.
    6. Bonnet, Céline & Richards, Timothy J., 2016. "Models of Consumer Demand for Differentiated Products," TSE Working Papers 16-741, Toulouse School of Economics (TSE).
    7. Frontuto, Vito, 2019. "Forecasting household consumption of fuels: A multiple discrete-continuous approach," Applied Energy, Elsevier, vol. 240(C), pages 205-214.
    8. Runa Nesbakken, 1998. "Residential Energy Consumption for Space Heating in Norwegian Households A Discrete-Continuous Choice Approach," Discussion Papers 231, Statistics Norway, Research Department.
    9. Dorothée Charlier & Sondès Kahouli, 2018. "Fuel poverty and residential energy demand: how fuel-poor households react to energy price fluctuations," Post-Print halshs-01957771, HAL.
    10. Dorothee Charlier and Sondes Kahouli, 2019. "From Residential Energy Demand to Fuel Poverty: Income-induced Non-linearities in the Reactions of Households to Energy Price Fluctuations," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
    11. Damette, Olivier & Delacote, Philippe & Lo, Gaye Del, 2018. "Households energy consumption and transition toward cleaner energy sources," Energy Policy, Elsevier, vol. 113(C), pages 751-764.
    12. Rehdanz, Katrin, 2007. "Determinants of residential space heating expenditures in Germany," Energy Economics, Elsevier, vol. 29(2), pages 167-182, March.
    13. Jing Li & Edward C. Jaenicke & Tobenna D. Anekwe & Alessandro Bonanno, 2018. "Demand for ready‐to‐eat cereals with household‐level censored purchase data and nutrition label information: A distance metric approach," Agribusiness, John Wiley & Sons, Ltd., vol. 34(4), pages 687-713, October.
    14. Bakaloglou, Salomé & Charlier, Dorothée, 2021. "The role of individual preferences in explaining the energy performance gap," Energy Economics, Elsevier, vol. 104(C).
    15. Kenichi Mizobuchi & Kenji Takeuchi, 2015. "Replacement or Additional Purchase: The Impact of Energy-Efficient Appliances on Household Electricity Saving," Discussion Papers 1520, Graduate School of Economics, Kobe University.
    16. van den Bergh, Jeroen C.J.M., 2008. "Environmental regulation of households: An empirical review of economic and psychological factors," Ecological Economics, Elsevier, vol. 66(4), pages 559-574, July.
    17. Jeong, Jaehoon & Seob Kim, Chang & Lee, Jongsu, 2011. "Household electricity and gas consumption for heating homes," Energy Policy, Elsevier, vol. 39(5), pages 2679-2687, May.
    18. Tovar, Miguel A., 2012. "The structure of energy efficiency investment in the UK households and its average monetary and environmental savings," Energy Policy, Elsevier, vol. 50(C), pages 723-735.
    19. Hache, Emmanuel & Leboullenger, Déborah & Mignon, Valérie, 2017. "Beyond average energy consumption in the French residential housing market: A household classification approach," Energy Policy, Elsevier, vol. 107(C), pages 82-95.
    20. Kidokoro, Yukihiro, 2016. "A micro foundation for discrete choice models with multiple categories of goods," Journal of choice modelling, Elsevier, vol. 19(C), pages 54-72.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:uto:dipeco:201203. 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: Piero Cavaleri or Marina Grazioli (email available below). General contact details of provider: https://edirc.repec.org/data/detorit.html .

    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.