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Energy Flexibility and Technological Progress with Multioutput Production Application on Norwegian Pulp and Paper Industries

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Abstract

We analyse the energy flexibility and technological change in the pulp and paper industry by applying a multioutput production function. The pulp and paper industry mostly consists of heterogeneous firms. They produce a wide range of different goods with different technologies. We take the heterogeneity into consideration in two ways. First, we disaggregate the industry into three sub-sectors according to their products. Second, in each sub-sector our model accounts for the heterogeneity between firms. We apply a specific flexible cost function, which makes sure that the curvature conditions hold. In our model, the energy flexibility occurs in different ways. On one hand producers may invest in technologies, which make them able to switch between different energy sources. On the other hand they can change their output mix towards less energy intensive products when the energy prices increase.

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  • Øystein Døhl, 2002. "Energy Flexibility and Technological Progress with Multioutput Production Application on Norwegian Pulp and Paper Industries," Discussion Papers 318, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:318
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    1. Wales, Terence J., 1977. "On the flexibility of flexible functional forms : An empirical approach," Journal of Econometrics, Elsevier, vol. 5(2), pages 183-193, March.
    2. Caves, Douglas W & Christensen, Laurits R, 1980. "Global Properties of Flexible Functional Forms," American Economic Review, American Economic Association, vol. 70(3), pages 422-432, June.
    3. Fuss, Melvyn & McFadden, Daniel (ed.), 1978. "Production Economics: A Dual Approach to Theory and Applications," Elsevier Monographs, Elsevier, edition 1, number 9780444850133.
    4. Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
    5. W.A. Barnett & J.M. Binner, 2004. "The Global Properties of the Minflex Laurent, Generalized Leontief, and Translog Flexible Functional Forms," Contributions to Economic Analysis, in: Functional Structure and Approximation in Econometrics, pages 79-97, Emerald Group Publishing Limited.
    6. Kumbhakar, Subal C, 1989. "Estimation of Technical Efficiency Using Flexible Functional Form and Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 7(2), pages 253-258, April.
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    More about this item

    Keywords

    Multiproduct symmetric generalised McFadden cost function; energy flexibility; elasticity; technological change; curvature conditions; Pulp and paper.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D20 - Microeconomics - - Production and Organizations - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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