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Semi‐parametric Modelling of Investments in Heating Installations: The Case of the Dutch Glasshouse Industry

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  • Alfons Oude Lansink
  • Kyosti Pietola

Abstract

This paper applies a semi‐parametric approach to estimating a generalised model of investments in heating installations. The results suggest that marginal costs of investments in heating installations increase quickly at small investment levels, whereas the increase slows down at higher investment levels. Therefore, standard parametric adjustment cost models are probably biased such that they underestimate the costs of small investments and overestimate the costs of large investments. Results also show that investments in heating installations are very responsive to changes in energy prices. Therefore, an energy tax may be an effective instrument to encourage investments in new energy‐saving heating installations.

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  • Alfons Oude Lansink & Kyosti Pietola, 2005. "Semi‐parametric Modelling of Investments in Heating Installations: The Case of the Dutch Glasshouse Industry," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(3), pages 433-448, December.
    • Handle: RePEc:bla:jageco:v:56:y:2005:i:3:p:433-448
    DOI: 10.1111/j.1477-9552.2005.00019.x
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    References listed on IDEAS

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    1. Øivind Anti Nilsen & Fabio Schiantarelli, 2003. "Zeros and Lumps in Investment: Empirical Evidence on Irreversibilities and Nonconvexities," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1021-1037, November.
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    Cited by:

    1. Zier, Patrick, 2013. "Econometric impact assessment of the Common Agricultural Policy in East German agriculture," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 71, number 71.
    2. Natalia Goncharova & Arie Oskam & Alfons Oude Lansink & Arno Van Der Vlist & Jos Verstegen, 2008. "Investment Spikes in Dutch Greenhouse Horticulture," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(3), pages 516-536, September.

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