Search Results (8)

Motivated by the projected solar and wind capacity additions around the world, we model the energy procurement decision of a load serving entity (LSE) faced with alternatives of solar power purchase agreements (PPAs), wind PPAs, non-renewable energy forward contracts, and spot energy purchases in a wholesale electricity market with uncertain prices. Using a pseudo-data sample of over one million observations, we estimate a translog cost function to find that the LSE’s own-price elasticity estimates range from −1.87 for nighttime spot MWh demands to −13.1 for forward MWh demands. MWh demands are influenced by solar and wind capacity factors, daytime and nighttime retail sales, and spot energy price forecasts. The LSE’s optimal procurement of solar capacity is roughly twice the wind capacity, corroborating the ratios of projected solar and wind capacity additions in regions around the world. If the LSE’s existing energy mix is nearly all renewable, it becomes carbon-free when solar and wind power purchase agreements have declining energy prices or when forward energy price and spot energy price forecasts increase over time. These results imply that piecemeal policy measures can have conflicting outcomes, calling for integrated resource planning under wholesale market competition and price uncertainty. Full article

While price responsiveness of residential demand for natural gas has important implications on resource planning and energy modelling, its estimates from prior studies are very diverse. Applying panel data analysis and five parametric specifications to monthly data for the lower 48 states in 1990–2019, we estimate own-price elasticities of residential demand for natural gas in the United States (US). Using results from cross-section dependence (CD) test, panel unit root tests, panel time-series estimators, and rolling-window analysis, we document: (1) the statistically significant (p-value ≤ 0.05) static own-price elasticity estimates are −0.271 to −0.486, short-run −0.238 to −0.555 and long-run −0.323 to −0.796; (2) these estimates vary by elasticity type, sample period, parametric specification, treatment of CD and assumption of partial adjustment; (3) erroneously ignoring the highly significant (p-value < 0.01) CD shrinks the size of these estimates that vary seasonally, regionally, and nonlinearly over time; and (4) residential natural gas shortage costs decline with the size of own-price elasticity estimates. These findings suggest that achieving deep decarbonization may require strategies that do not rely solely on prices, such as energy efficiency standards and demand-side-management programs. Demand response programs may prove useful for managing natural gas shortages. Full article

Milkfish, Chanos chanos, is one of the major inland cultured fish species in Taiwan. Variations in land resources and climate have led to the application of two distinct culture practices of milkfish polycultures with white shrimp, Penaeus indicus. This study applies a translog cost function model to analyze the production scale economy and input demand price elasticity of four milkfish polyculture systems with two different culture periods (OWC and NOWC) and two different white shrimp–milkfish fry stocking ratios (low SMR: 10–55 fry/ha; high SMR: 56–100 fry/ha). The findings show that the four milkfish polyculture systems require different operational adjustments to increase production while reducing the average culture cost. More specifically, overwinter cultures (OWC) have economies of scale. Farmers may reduce the average cost by expanding the production scale. Non-overwinter polycultures (NOWC) with high SMR are at the stage of decreasing return to scale, meaning that gains in output of milkfish cannot reduce the average cost. In terms of input factor use, farmers of OWC systems with high SMR are sensitive to fluctuations in the fry price since fry constitutes the input factor exhibiting the highest own-price elasticity. Moreover, fry and feed of OWC households with high SMR have high levels of substitutability, whereas fry and other input exhibit substitutability in OWC systems with low SMR. In NOWC farming households with high SMR, fry and capital have substitutability. It is thus recommended to modify the input factor use according to the culture mode and the white shrimp–milkfish stocking density ratio. Moreover, the study found that NOWCs have considerably higher SMR than OWCs, which may lead to a deterioration of the water quality in NOWC fishponds and lower survival rates. It is thus recommended to reduce the SMR to 31:1 to achieve economies of scale in production and increase the survival rate of milkfish and white shrimp. Full article

In the present paper, an investigation into Thailand’s energy demand is performed to determine if: (1) a linear or nonlinear Engel curve better explains the relationship between income and energy consumption, and (2) systems with pre-commitments better model energy consumptions. Four demand systems are estimated: an almost ideal demand system (AIDS), the quadratic almost ideal demand system (QAIDS), generalized almost ideal demand system (GAIDS), and the generalized quadratic almost ideal demand system (GQAIDS). Elasticities are calculated for policy implications. The empirical results suggest that models considering pre-commitments and nonlinear Engel curves may be slightly more appropriate for Thailand’s energy system, from both statistic and economic standpoints. Statistical inferences appear to favor the GQAIDS model based on the encompassing results. Economic reasonability also appears to favor the GQAIDS model, in particular, petroleum products, as it provides results consistent with the notions of precommitments and fuel substitutability found in previous studies. Most of the previous studies in various forms have shown that the demand for petroleum products is relatively inelastic to price in Thailand. The current study, however, finds that own-price elasticities of uncompensated demand for petroleum products are almost unitary, which is relatively more elastic than most of the previous studies. As such, further studies are required and the price-based policy on petroleum products targeting the reduction in petroleum product dependence must be implemented with caution. Full article

Consumers in the U.S. increasingly prefer plant-based milk alternative beverages (abbreviated “plant milk”) to conventional milk. This study is motivated by the need to take into consideration varied nutritional and qualitative attributes in plant milk to examine consumers’ purchasing behavior and estimate demand elasticities which are achieved by a new approach combing hedonic pricing model with Barten’s synthetic demand system. The method of estimation is enlightened from the common practice of companies differentiating their products in multidimensions in terms of attributes. A research dataset was uniquely created by associating the products’ purchase data from Nielsen Homescan dataset with exclusive first-hand nutritional data. Estimations began with creating a multidimensional hedonic attribute space based on the qualitative information of different types of plant milk and conventional milk available to consumers and then calculating the hedonic distances by Euclidean distance measurement to reparametrize Barten’s synthetic demand system. Estimation results showed that the highest own-price elasticity pertained to soy milk which was −0.25. Three plant milk types had inelastic demand. Soy milk exerted substituting effects on all types of conventional milk products and vice versa. Soy milk, rice milk and almond milk entertained complementary relationships between each other and four types of conventional milk were strong substitutes within the group. Full article

Investigation shows that train travel has a lower pollution impact on the environment than flight travel or car travel. A stated preferences (SP) survey can effectively obtain the data of the commuter’s response to the hypothetical train price changes beyond the scope of previous observations. To this end, based on SP survey, we estimate the price elasticity of train travel demand and analyze its variation rules. It is shown that: (1) the own-price elasticities of demand are −1.049028 during peak period and −1.090438 during off-peak period, respectively; (2) the cross-price elasticities of demand are 0.001280 for train and air and 0.001156 for train and car during peak period; and 0.001350 for train and air and 0.001230 for train and car during off-peak period; (3) the own and cross-price elasticities of demand during off-peak period are bigger than the ones during peak period; (4) when the influence factors’ influence degree is 3 or 5, the own and cross-price elasticities of demand are largest; when the influence degree is 1, the own and cross-price elasticities of demand are smallest. A result application example shows that the elasticities obtained from this paper could be used to reduce energy used and CO₂ emissions effectively. Full article

The paper analyzes food consumption patterns of Vietnamese households, using a complete demand system and socio-demographic information. Demand elasticities are estimated applying a modified Almost Ideal Demand System (AIDS) model on the Vietnamese household survey data in 2006. The results indicate that food consumption patterns in Vietnam are affected by income, price, as well as socio-economic and geographic factors. All food has positive expenditure elasticities and negative own-price elasticities. Rice has mean expenditure elasticity of 0.36 and mean own-price elasticity of −0.80. Using the estimated elasticities, the study finds that when rice prices increase by 20 percent, average household welfare rises by 1.3 percent, yet it is important to note that the benefits and costs are not spread evenly across the population. Overall, middle-income households gain the most, while the poorest households gain the least from higher rice prices. This indicates that support programs should target the poorest quintile, especially the poor in the regions hit hardest by higher prices. More generally, our study points out that targeted food policies should be formulated based on specific food demand patterns in the groups. Full article

Since natural gas has become a new star in China’s energy mix, a reliable estimation of the price elasticity of natural gas demand is crucial if we are to understand how energy price changes affect natural gas consumption. In this paper, we conduct a Meta-regression analysis to quantitatively synthesize empirical estimates of the price elasticity of natural gas demand reported in previous studies, provide true underlying values, and explain the heterogeneity of the aforementioned estimates. The Fixed-effects model and ordinary least squares (OLS) are applied to estimate the regression models. As a result, this paper reports a mean elasticity of −1.521 and 0.410 for the short- and long-run own-price elasticity, separately; −0.762 and 0.008 for the short- and long-run cross-price elasticity-coal to natural gas, respectively; 2.122 and 1.884 for the short- and long-run cross-price elasticity-electricity to natural gas, separately; and 2.267 and 1.275 for the short- and long-run cross-price elasticity-oil to natural gas, respectively. Our results suggest that natural gas consumption increases with the decrease of its own and coal prices in the short term and rise of electricity and oil prices. It also shows that almost all heterogeneity can be explained by the type of data, sample period, models of analysis, geographical region, and type of consumer. Full article