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Combining a Demand System with the Household Production Approach. Modelling Energy Demand in Selected European Countries

  • Kurt Kratena

    (WIFO)

  • Michael Wüger

    (WIFO)

This paper sets up a model of private consumption for selected EU countries with special emphasis on the impact of energy efficiency on energy demand. The analysis starts out from the idea that consumers' demand is a combination of a demand for "services" with a technological component. Demand for services is derived from utility maximisation or cost minimisation, and actual energy (commodity) demand stems from a household production process. The model indirectly takes into account the impact of capital stocks and technology on energy demand and all the different links between services and goods demand. That allows for describing more channels of impacts on consumption expenditure for energy and non-energy than in traditional consumption models. Exogenous key variables that can be modified in order to calculate different scenarios are prices of energy and non-energy goods, and the exogenous capital stock (infrastructure) or user costs of capital. Simulations of revenue-neutral energy taxation with changes in capital stocks for heating and transport are carried out.

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Paper provided by WIFO in its series WIFO Working Papers with number 311.

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Length: 29 pages
Date of creation: 27 Feb 2008
Date of revision:
Handle: RePEc:wfo:wpaper:y:2008:i:311
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  1. Griliches, Zvi, 1980. "R & D and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 70(2), pages 343-48, May.
  2. Coe, D.T. & Helpman, E., 1993. "International R&D Spillovers," Papers 5-93, Tel Aviv.
  3. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
  4. Nic Rivers & Mark Jaccard, 2005. "Combining Top-Down and Bottom-Up Approaches to Energy-Economy Modeling Using Discrete Choice Methods," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 83-106.
  5. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  6. 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.
  7. Brown, Paul M. & Cameron, Linda D., 2000. "What can be done to reduce overconsumption?," Ecological Economics, Elsevier, vol. 32(1), pages 27-41, January.
  8. Böhringer, Christoph & Löschel, Andreas, 2004. "Measuring Sustainable Development: The Use of Computable General Equilibrium Models," ZEW Discussion Papers 04-14, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. Conrad, K & Schroder, M, 1991. "Demand for Durable and Nondurable Goods, Environmental Policy and Consumer Welfare," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 6(3), pages 271-86, July-Sept.
  10. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
  11. J. Daniel Khazzoom, 1980. "Economic Implications of Mandated Efficiency in Standards for Household Appliances," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 21-40.
  12. J. Daniel Khazzoom, 1989. "Energy Savings from More Efficient Appliances: A Rejoinder," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 157-166.
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