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Interfuel Substitution within Industrial Companies: An Analysis Based on Panel Data at Company Level

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  • Thomas Bue Bjørner
  • Henrik Holm Jensen

Abstract

In this paper we estimate two models for interfuel substitution between electricity, district heating and (other) fuels using a micro panel data set containing information for most Danish industrial companies in the period between 1983 and 1997. The main finding of the study is that interfuel substitution is low within the companies, especially between electricity and other fuels. The partial own-price elasticities estimated are small (between -0.04 and -0.13) both for electricity and other fuels, while it is between -0.44 and -0.50 for district heating. The partial own-price elasticity for electricity is smaller than generally found in macro studies. One explanation may be that the macro studies, in addition to technical substitution, capture some derived demand effect (i.e., aggregation bias).

Suggested Citation

  • Thomas Bue Bjørner & Henrik Holm Jensen, 2002. "Interfuel Substitution within Industrial Companies: An Analysis Based on Panel Data at Company Level," The Energy Journal, , vol. 23(2), pages 27-50, April.
    • Handle: RePEc:sae:enejou:v:23:y:2002:i:2:p:27-50
    DOI: 10.5547/ISSN0195-6574-EJ-Vol23-No2-1
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    References listed on IDEAS

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    4. Michelle Turnovsk & Michael Folie & Alistair Ulph, 1982. "Factor Substitutability in Australian Manufacturing with Emphasis on Energy Inputs," The Economic Record, The Economic Society of Australia, vol. 58(1), pages 61-72, March.
    5. Considine, Timothy J & Mount, Timothy D, 1984. "The Use of Linear Logit Models for Dynamic Input Demand Systems," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 434-443, August.
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