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Energy Price, Environmental Policy, and Technological Bias

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  • Abbas A. Taheri
  • Rodney Stevenson

Abstract

This paper investigates input biasing characteristics of technology, environmental compliance, and changing energy prices. In particular we wish to investigate whether input biases of technology and environmental compliance are induced by changes in relative fuel prices, or whether there are price induced technology and environmental compliance biases. Using a two-stage optimization, we estimate a truncated third-order translog model by its associated (second order) cost share equations. The model uses two-digit SIC data panel for the period 1974-- 1991. We find evidence of significant fuel-saving technological bias, while environmental compliance has been significantly fossil fuel using. The results indicate that technology and environmental compliance biases are, in part, induced by changes in relative fuel prices and such induced biases are mainly fuel saving. Finally, our demand elasticity estimates indicate that industrial demand for most fossil fuels and purchased electricity is significantly price inelastic. Policy implications of these results are also briefly discussed.

Suggested Citation

  • Abbas A. Taheri & Rodney Stevenson, 2002. "Energy Price, Environmental Policy, and Technological Bias," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 85-107.
    • Handle: RePEc:aen:journl:2002v23-04-a04
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    Cited by:

    1. Di Maria, C., 2006. "Choosing the direction : Investment, the environment and economic development," Other publications TiSEM 81c9b8de-42c0-4938-8b82-c, Tilburg University, School of Economics and Management.
    2. Jevgenijs Steinbuks, 2012. "Interfuel Substitution and Energy Use in the U.K. Manufacturing Sector," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    3. Raymond J.G.M. Florax & Henri L.F. de Groot & Peter Mulder, 2011. "Energy Efficiency and Technological Change," Chapters, in: Raymond J.G.M. Florax & Henri L.F. de Groot & Peter Mulder (ed.), Improving Energy Efficiency through Technology, chapter 1, Edward Elgar Publishing.
    4. Calbick, K.S. & Gunton, Thomas, 2014. "Differences among OECD countries’ GHG emissions: Causes and policy implications," Energy Policy, Elsevier, vol. 67(C), pages 895-902.
    5. Peter Mulder & Henri de Groot, 2003. "International comparison of sectoral energy- and labour-productivity performance; stylised facts and decomposition of trends," CPB Discussion Paper 22, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Peter Mulder & Henri L.F. de Groot, 2004. "Decoupling Economic Growth and Energy Use. An Empirical Cross-Country Analysis for 10 Manufacturing Sectors," Tinbergen Institute Discussion Papers 04-005/3, Tinbergen Institute.
    7. Corrado Maria & Edwin Werf, 2008. "Carbon leakage revisited: unilateral climate policy with directed technical change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(2), pages 55-74, February.
    8. Li, Zhen & Wu, Baijun & Wang, Danyang & Tang, Maogang, 2022. "Government mandatory energy-biased technological progress and enterprises' environmental performance: Evidence from a quasi-natural experiment of cleaner production standards in China," Energy Policy, Elsevier, vol. 162(C).
    9. Peter Mulder & Henri de Groot, 2003. "International comparison of sectoral energy- and labour-productivity performance; stylised facts and decomposition of trends," CPB Discussion Paper 22.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

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    JEL classification:

    • F0 - International Economics - - General

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