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Durable goods and long-run electricity demand: Evidence from air conditioner purchase behavior

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  • Rapson, David

Abstract

I estimate a dynamic structural model of demand for air conditioners, the most energy-intensive home appliance in the US. The model explores the links between demand for durable goods and expected changes in key attributes: energy efficiency and price. I incorporate expectations explicitly as a feature of the choice setting, and use parameter estimates from the model to calculate durable good demand elasticities with respect to energy efficiency, electricity price, and price of the durable itself. These estimates fill a large gap in the literature, and also shed light on consumer behavior in this setting. Results indicate that consumers are forward-looking and value the stream of future savings derived from energy efficiency.

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  • Rapson, David, 2014. "Durable goods and long-run electricity demand: Evidence from air conditioner purchase behavior," Journal of Environmental Economics and Management, Elsevier, vol. 68(1), pages 141-160.
    • Handle: RePEc:eee:jeeman:v:68:y:2014:i:1:p:141-160
    DOI: 10.1016/j.jeem.2014.04.003
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    More about this item

    Keywords

    Dynamic discrete choice; Durable goods; Energy demand;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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