[en] Separability is a pivotal theoretical and empirical concept in production theory. While the standard definition of separability is primarily motivated by the desire to conceptualize production decisions as a sequential process, the principal purpose of an appropriate concept of separability in empirical work is to justify the omission of variables for which data are either of poor quality or unavailable. This paper demonstrates that this empirical concept needs to be more restrictive than the classical notion of separability is. Therefore, we suggest a novel definition of separability based on cross-price elasticities that has clear empirical content. Because there is ample empirical reason to even doubt the assumption that energy is separable from all other production factors in the relatively mild form of classical separability, energy seems to be an indispensable production factor under separability aspects

[en] An important concern of OPEC's work is to be able to understand how much supply of oil exists in different countries, in order to help better conserve oil. This paper extends M. King Hubbert's oil production and discovery forecasting model (Hubbert, 1962), using a non-time-series cumulative discovery and production quadratic Hubbert curve and structural shift variables to model technology and regulation changes. The model can be used to determine better world oil supplies. Price is tested, to see how powerful it is for increasing or decreasing oil supply. Using a trend of cumulative production, instead of time, will help to better fix the supply elasticity with respect to price, which is shown to be very inelastic. An interesting question is whether cumulative discovery or production constitutes an I(2) variable. This paper explains that they are not I(2) variables. (Author)

[en] Analyzing US brand hotels, over a 13-year period, this study provides empirical evidence of a significant negative relationship between gasoline prices and demand for certain lodging products, controlling for economic factors (i.e. gross domestic product and population density). Applying principles from microeconomic demand theory to the literature on gasoline price elasticities, consumer demographics and lodging demand, a set of hypotheses were devised to test the relationship between gasoline prices and lodging demand for specific hotel locations and price segments. Using fixed effects models, the results reveal that lodging demand decreases as gasoline prices rise in all segments except upper-upscale and all locations except urban areas. Hotels in midscale without food and beverage and economy market segments, in resort, suburban and highway locations, exhibit the greatest association between gasoline price shifts and demand. Implications of these findings are discussed for both hospitality research and practice. (Author)

[en] Automobile gasoline demand can be expressed as a multiplicative function of fuel efficiency, mileage per car and car ownership. This implies a linear relationship between the price elasticity of total fuel demand and the price elasticities of fuel efficiency, mileage per car and car ownership. In this meta-analytical study we aim to investigate and explain the variation in empirical estimates of the price elasticity of gasoline demand. A methodological novelty is that we use the linear relationship between the elasticities to develop a meta-analytical estimation approach based on a Seemingly Unrelated Regression (SUR) model with Cross Equation Restrictions. This approach enables us to combine observations of different elasticities and thus increase our sample size. Furthermore, it allows for a more detailed interpretation of our meta-regression results. The empirical results of the study demonstrate that the SUR approach leads to more precise results (i.e., lower standard errors) than a standard meta-analytical approach. We find that, with mean short run and long run price elasticities of - 0.34 and - 0.84, respectively, the demand for gasoline is not very price sensitive. Both in the short and the long run, the impact of a change in the gasoline price on demand is mainly driven by responses in fuel efficiency and mileage per car and to a slightly lesser degree by changes in car ownership. Furthermore, we find that study characteristics relating to the geographic area studied, the year of the study, the type of data used, the time horizon and the functional specification of the demand equation have a significant impact on the estimated value of the price elasticity of gasoline demand. (author)

[en] Electricity has played a pivotal role in the development of Punjab economy. Of late there has been a steep rise in the demand for electricity in the state. The present study undertakes a holistic view of growth of demand for electricity in the state. The technique applied is multiple regression and secondary data is used for the purpose of analysis. The study concludes that demand for electricity in the state is price inelastic but income elastic for majority of consuming sectors. An important policy implication thereof is that price hike will be ineffective in regulating and managing demand unless price is varied in an hourly basis. Therefore, the state has to resort to other demand-side management (DSM) measures, such as improving efficiency of electricity use and its conservation. Considering the high income elasticity of electricity demand, sufficient electricity-generating capacity needs to be created, since demand is expected to grow at an accelerated rate in future. This calls for a comprehensive electricity policy. The study further concludes that in the long run, price-demand as well as income-demand relationship in case of electricity is likely to remain uncertain especially in the post-reform era. (author)

[en] Highlights: •A monopoly with isoelastic demand function is studied. •Reduced rationality monopolist uses gradient adjustment. •If marginal cost is small, increasing elasticity leads to stable dynamics. •For large marginal cost, dynamic can be unstable for both small and large elasticity. -- Abstract: We study a monopolistic market characterized by a constant elasticity demand function, in which the firm technology is described by a linear total cost function. The firm is assumed to be boundedly rational and to follow a gradient rule to adjust the production level in order to optimize its profit. We focus on what happens on varying the price elasticity of demand, studying the effect on the equilibrium stability. We prove that, depending on the relation between the market size and the marginal cost, two different scenarios are possible, in which elasticity has either a stabilizing or a mixed stabilizing/destabilizing effect

[en] This paper reviews the applied theory of energy cross price partial elasticities of substitution, and presents it in a transparent fashion. It uses log linear and translog production and cost functions due to their economic properties and convenient estimating forms, but the theory applies other functional forms. The objective is to encourage increased empirical research that would deepen understanding and appreciation of energy substitution. (author)

[en] During the 1960s energy consumption of Danish households increased relatively fast, but the oil price shocks of the 1970s and subsequent energy policy changes reversed this development towards stagnation in energy consumption in the recent decades. Using time series data covering the period 1960-1996 the final energy consumption of the residential sector is analysed in the framework of co-integration and error-correction modelling. The long run income and price elasticities are found to be 1.17 and -0.85, respectively, but in the short run energy prices seem to influence consumption less as only income and the weather conditions appear significantly in the short run dynamics of the estimated error-correction model. (au)

[en] By estimating the past energy demand function by sector and types of energy in Japan, the existence of asymmetric price elasticities in most the functions was confirmed. As part of the study, a simple energy and economy model was also constructed to compare future energy demand between the cases with symmetric or asymmetric price elasticities. Results show that future energy demand with asymmetric price elasticities is greater than that with symmetric price elasticities. This result is attributed to the fact that in the asymmetric case, past maximum prices are the most significant factors and price effects will not work unless future energy prices exceed past maximum levels. One of the important implications of this study, i.e. the effect on controlling carbon dioxide emissions, is highlighted. It is pointed out that since price elasticities are small, a high rate of carbon tax is needed to decrease carbon dioxide emissions; meaning that the carbon tax should be high enough for future energy prices to exceed the historical maximum levels. The model developed in this study does not incorporate the substitution between fuels, it is, therefore, not suitable for the further quantitative analysis of the carbon tax. While the study does not deny the applicability of the econometric approach to greenhouse gas analysis, it does point to the an importance of being conscious of the limits of the econometric approach. 7 refs., 4 tabs., 3 figs, 1 appendix

[en] Evaluations of energy-price policies are necessarily based on measures of the substitution of energy and non-energy inputs. Facing a variety of substitution elasticities, the central question arises which measure would be appropriate. Apparently, for a long time, this question has not been at issue: Allen's elasticities of substitution (AES) have been the most-used measures in applied production analysis. This paper's main contribution is an instructive survey of the origin of substitution measures and of the trinity of empirical substitution elasticities - AES, cross-price elasticities, and the Morishima elasticities of substitution (MES) - with particular emphasis on their interpretations and the perspectives that will be captured by these measures. This survey clarifies why classical cross-price elasticities are to be preferred for many practical purposes. Berndt and Wood's (Rev. Econom. Stat. 57 (1975) 259) frequently applied data set of US manufacturing is used to illustrate why assessments of energy-price policies would be better based on cross-price elasticities like the energy-price elasticity of capital, rather than on AES or MES