general equilibrium rebound from energy efficiency innovation abstract energy efficiency improvements rebound when economic responses undercut their direct energy savings i show that general equilibrium channels typically amplify rebound by making consumption goods cheaper but typically dampen rebound by increasing demand for non energy inputs to production and by changing the size of the energy supply sector improvements in the efficiency of the energy supply sector generate especially large rebound because they make energy cheaper in all other sectors quantitatively general equilibrium channels reduce rebound in u s consumption good sectors from 39 to 28 but increase rebound in the energy supply sector from 42 to 80

modelling household energy expenditures using micro data this paper is concerned with the empirical modeling of domestic demand for energy in the united kingdom at the level of the individual household a two stage budgeting model of household demand for energy conditional on durable ownership is developed at the first stage income is allocated between energy and nonenergy consumption while at the second stage energy expenditure is disaggregated the second stage allocation is assumed to be between gas electricity and a composite good other fuels estimation takes place using a sample of some 50 000 households drawn from the annual u k family expenditure survey for the years 1972 83 a source that has not been fully exploited in the analysis of energy demand to date copyright 1989 by royal economic society

estimating direct and indirect rebound effects for u s households with input output analysis part 2 simulation abstract this is the second part of a two part paper that integrates economic and industrial ecology methods to estimate the indirect rebound effect from residential energy efficiency investments we apply the model developed in part one to simulate the indirect rebound given an estimate of the direct rebound using a 2002 environmentally extended input output model and the 2004 consumer expenditure survey in 2002 for the u s we find an indirect rebound of 5 15 in primary energy and co 2 e emissions assuming a 10 direct rebound depending on the fuel saved with efficiency and household income the indirect rebound can be as high as 30 40 in no x or so 2 emissions for efficiency in natural gas services the substitution effect modeled in part one is small in most cases and we discuss appropriate applications for proportional or income elasticity spending assumptions large indirect rebound effects occur as the u s electric grid becomes less carbon intensive in households with large transportation demands or as energy prices increase even in extreme cases there is limited evidence for backfire or a rebound effect greater than 100 enacting pollution taxes or auctioned permits that internalize the externalities of energy use would ensure that rebound effects unambiguously increase consumers welfare

estimating direct and indirect rebound effects for u s households with input output analysis part 1 theoretical framework abstract this is the first part of a two part paper providing an analytical model of the indirect rebound effect given a direct rebound estimate that integrates consumer demand theory with the embodied energy of household spending from environmentally extended input output analysis the second part applies the model developed in part one to simulate the direct and indirect rebound for the average u s household in terms of primary energy co2e nox and so2 emissions and for energy efficiency investments in electricity natural gas or gasoline services part one provides a critical review of the largely independent economic and industrial ecology literatures on the indirect rebound by studying the two goods case and the n goods case we demonstrate that the indirect rebound is bounded by the consumer budget constraint and inversely related to the direct rebound we also compare the common proportional spending and income elasticity spending assumptions with our model of cross price elasticities including both substitution and income effects for the indirect rebound by assuming zero incremental capital costs and the same embodied energy as conventional technologies for efficient appliances we model an upper bound of the indirect rebound future work should also consider the increase in consumer welfare possible through the rebound effect

estimating direct rebound effects for personal automotive travel in great britain direct rebound effects result from increased consumption of cheaper energy services for example more fuel efficient cars encourage more car travel this study is the first to quantify this effect for personal automotive travel in great britain we use aggregate time series data on transport activity fuel consumption and other relevant variables over the period 1970 2011 and estimate the direct rebound effect from the elasticity of both vehicle and passenger kilometres with respect to a vehicle fuel efficiency km mj b the fuel cost of driving km and c road fuel prices mj we estimate a total of 108 models paying careful attention to methodological issues and model diagnostics taking changes in fuel efficiency as the explanatory variable we find little evidence of a long run direct rebound effect in great britain over this period however taking changes in either the fuel cost of driving or fuel prices as the explanatory variable we estimate a direct rebound effect in the range 9 to 36 with a mean of 19 this estimate is consistent with the results of us studies and suggests that around one fifth of the potential fuel savings from improved car fuel efficiency may have been eroded through increased driving we also show how the normalisation of distance travelled per capita per adult or per driver affects the results obtained

jevons paradox revisited the evidence for backfire from improved energy efficiency beginning with william stanley jevons in 1865 a number of authors have claimed that economically justified energy efficiency improvements will increase rather than reduce energy consumption jevons paradox is extremely difficult to test empirically but could have profound implications for energy and climate policy this paper summarises and critiques the arguments and evidence that have been cited in support of jevons paradox focusing in particular on the work of len brookes and harry saunders it identifies some empirical and theoretical weaknesses in these arguments highlights the questions they raise for economic orthodoxy and points to some interesting parallels between these arguments and those used by the biophysical school of ecological economics while the evidence in favour of jevons paradox is far from conclusive it does suggest that economy wide rebound effects are larger than is conventionally assumed and that energy plays a more important role in driving productivity improvements and economic growth than is conventionally assumed

optimal executive compensation versus managerial power a review of lucian bebchuk and jesse fried s pay without performance the unfulfilled promise of executive compensation this essay reviews lucian a bebchuk and jesse m fried s pay without performance the unfulfilled promise of executive compensation bebchuk and fried criticize the standard view of executive compensation in which executives negotiate contracts with shareholders that provide incentives that motivate them to maximize the shareholders welfare in contrast bebchuk and fried argue that executive compensation is more consistent with executives who control their own boards and who maximize their own compensation subject to an outrage constraint they provide a host of evidence consistent with this alternative viewpoint the book can be evaluated from both positive and normative perspectives from a positive perspective much of the evidence they present especially about the camouflage and risk taking aspects of executive compensation systems is fairly persuasive however from a normative perspective the book conveys the idea that policy changes can dramatically improve executive compensation systems and consequently overall corporate performance it is unclear to me how effective potential reforms designed to achieve such changes are likely to be in practice

empirical estimates of the direct rebound effect a review beginning with william stanley jevons in 1865 a number of authors have claimed that economically justified energy efficiency improvements will increase rather than reduce energy consumption jevons paradox is extremely difficult to test empirically but could have profound implications for energy and climate policy this paper summarises and critiques the arguments and evidence that have been cited in support of jevons paradox focusing in particular on the work of len brookes and harry saunders it identifies some empirical and theoretical weaknesses in these arguments highlights the questions they raise for economic orthodoxy and points to some interesting parallels between these arguments and those used by the biophysical school of ecological economics while the evidence in favour of jevons paradox is far from conclusive it does suggest that economy wide rebound effects are larger than is conventionally assumed and that energy plays a more important role in driving productivity improvements and economic growth than is conventionally assumed 2008 elsevier ltd all rights reserved

can private motor vehicle augmenting technical progress reduce household and total fuel use abstract this paper demonstrates the importance of modelling energy intensive household services in general and private transportation in particular as combinations of energy and other inputs initially a partial equilibrium approach is used to analyse private transport consumption as a self produced commodity formed by household vehicle and fuel use we particularly focus on the impact of private vehicle augmenting technical progress in this framework we show that household fuel use will fall if it is easier to substitute between vehicles and fuel in the household production of private transport services than it is to substitute between private transport and the composite of all other goods in overall household consumption the analysis is then extended through computable general equilibrium simulation to investigate the wider implications of similar efficiency improvements when intermediate demand prices and nominal income are endogenous the subsequent reduction in the price of private transport service not observable in market prices allows the wage measured relative to the cpi to rise whilst the wage relative to the price of foreign goods falls this simultaneously increases uk international competitiveness encouraging increased exports and reduced import penetration whilst allowing employment to rise this provides an additional supply side stimulus to production employment and household income

rent dissipation through self regulation the social cost of monopoly under threat of reform this piece offers an alternative perspective on the social cost of monopoly and rent seeking an existing monopolist whose right is contested in a political market has an incentive to expend resources on direct lobbying efforts while also attempting to defuse reformist opposition because the strength of reformist opposition will generally be a function of the monopolist s past present and expected future pricing output decisions such opposition is endogenous the probability that an existing monopoly right will be retained depends on both direct lobbying efforts by the monopolist as well as the strength resolve and cohesiveness of the reformers by modifying its output pricing decision and in effect engaging in self regulation the monopolist gives up current profits in exchange for the expected future profits associated with retaining its monopoly rights such opposition dissipating effort is a form of indirect rent seeking that is complementary to direct lobbying efforts and unlike the tullock costs implied by the incumbent s direct lobbying this form of indirect rent seeking may imply a reduction in the social cost of monopoly

international spillover and rebound effects from increased energy efficiency in germany the pollution energy leakage literature raises the concern that policies implemented in one country such as a carbon tax or tight energy restrictions might simply result in the reallocation of energy use to other countries this paper addresses these concerns in the context of policies to increase energy efficiency rather than direct action to reduce energy use using a global cge simulation model we extend the analyses of economy wide rebound from the national focus of previous studies to incorporate international spill over effects from trade in goods and services our focus is to investigate whether these effects have the potential to increase or reduce the overall global rebound of local energy efficiency improvements in the case we consider increased energy efficiency in german production generates changes in comparative advantage that produce negative leakage effects thereby actually rendering global rebound less than national rebound

the rebound effect microeconomic definitions limitations and extensions abstract the rebound effect results in part from an increased consumption of energy services following an improvement in the technical efficiency of delivering those services this increased consumption offsets the energy savings that may otherwise be achieved if the rebound effect is sufficiently large it may undermine the rationale for policy measures to encourage energy efficiency the nature and magnitude of the rebound effect is the focus of long running dispute with energy economics this paper brings together previous theoretical work to provide a rigorous definition of the rebound effect to clarify key conceptual issues and to highlight the potential consequences of various assumptions for empirical estimates of the effect the focus is on the direct rebound effect for a single energy service indirect and economy wide rebound effects are not discussed beginning with khazzoom s original definition of the rebound effect we expose the limitations of three simplifying assumptions on which this definition is based first we argue that capital costs form an important part of the total cost of providing energy services and that empirical studies that estimate rebound effects from variations in energy prices are prone to bias second we argue that energy efficiency should be treated as an endogenous variable and that empirical estimates of the rebound effect may need to apply a simultaneous equation model to capture the joint determination of key variables third we explore the implications of the opportunity costs of time in the production of energy services and highlight the consequences for energy use of improved time efficiency the influence of time costs on the rebound effect and the existence of a parallel rebound effect with respect to time each of these considerations serves to highlight the difficulties in obtaining reliable estimates of the rebound effect and the different factors that need to be controlled for we discuss the implications of these findings for econometric studies and argue that several existing studies may overestimate the magnitude of the effect

negative rebound and disinvestment effects in response to an improvement in energy efficiency in the uk economy this paper uses a computable general equilibrium cge framework to investigate the conditions under which rebound effects may occur in response to increases in energy efficiency in the uk national economy previous work for the uk has suggested that rebound effects will occur even where key elasticities of substitution in production are set close to zero the research reported in this paper involves carrying out a systematic sensitivity analysis where relative price sensitivity is gradually introduced into the system focusing specifically on elasticities of substitution in production and trade parameters in order to determine conditions under which rebound effects become a likely outcome the main result is that while there is positive pressure for rebound effects even where direct and indirect demands for energy are very price inelastic this may be partially or wholly offset by negative income competitiveness and disinvestment effects which also occur in response to falling energy prices the occurrence of disinvestment effects is of particular interest these occur where falling energy prices reduce profitability in domestic energy supply sectors leading to a contraction in capital stock in these sectors which may in turn lead to rebound effects that are smaller in the long run than in the short run a result that runs contrary to the predictions of previous theoretical work in this area

missing carbon reductions exploring rebound and backfire effects in uk households households are expected to play a pivotal role in reducing the uk s greenhouse gas ghg emissions and the uk government is encouraging specific household actions to help meet its targets however due to the rebound effect only a portion of the ghg emission reductions estimated by simple engineering calculations are generally achieved in practice for example replacing short car journeys by walking or cycling reduces consumption of motor fuels but this frees up money that may be spent on for example purchasing extra clothes or flying on vacation alternatively the money may be put into savings since all of these options lead to ghg emissions total ghg savings may be less than anticipated indeed in some instances emissions may increase a phenomenon known as backfire we estimate that the rebound effect for a combination of three abatement actions by uk households is approximately 34 targeting re spending on goods and services with a low ghg intensity reduces this to a minimum of around 12 while re spending on goods and services with a high ghg intensity leads to backfire our study highlights the importance of shifting consumption to lower ghg intensive categories and investing in low carbon investments

rebound effect of improved energy efficiency for different energy types a general equilibrium analysis for china abstract this paper explores the rebound effect of different energy types in china based on a static computable general equilibrium model a one off 5 energy efficiency improvement is imposed on five different types of energy respectively in all the 135 production sectors in china the rebound effect is measured both on the production level and on the economy wide level for each type of energy the results show that improving energy efficiency of using electricity has the largest positive impact on gdp among the five energy types inter fuel substitutability does not affect the macroeconomic results significantly but long run impact is usually greater than the short run impact for the exports oriented sectors those that are capital intensive get big negative shock in the short run while those that are labour intensive get hurt in the long run there is no backfire effect however improving efficiency of using electricity can cause negative rebound which implies that improving the energy efficiency of using electricity might be a good policy choice under china s current energy structure in general macro level rebound is larger than production level rebound primary energy goods show larger rebound effect than secondary energy goods in addition the paper points out that the policy makers in china should look at the rebound effect in the long term rather than in the short term the energy efficiency policy would be a good and effective policy choice for energy conservation in china when it still has small inter fuel substitution

empirical evidence of direct rebound effect in catalonia this paper reviews the empirical literature concerning the direct rebound effect in households it briefly analyzes the main theoretical and methodological aspects and finally estimates the magnitude of direct rebound effect for all energy services using electricity in households of catalonia spain using econometric techniques the main results show an estimated direct rebound effect of 35 in the short term and 49 in the long term the existence of a rebound effect reduces the effectiveness of energy efficiency policies

price effects of energy efficient technologies a study of residential demand for heating and cooling energy efficient appliances reduce the marginal price of the services they deliver this article shows empirically that such price reductions result in energy savings that are smaller than those engineering techniques generally project using econometric techniques with data from a unique utility experiment and a detailed engineering thermal load model we find that actual conservation is as much as 13 below engineering estimates for cooling and 8 12 below for heating customers who conserve electricity are also persistent their houses are comparatively warmer in summer and cooler in winter

rethinking economy wide rebound measures an unbiased proposal in spite of having been first introduced in the last half of the ninetieth century the debate about the possible rebound effects from energy efficiency improvements is still an open question in the economic literature this paper contributes to the existing research on this issue proposing an unbiased measure for economy wide rebound effects the novelty of this economy wide rebound measure stems from the fact that not only actual energy savings but also potential energy savings are quantified under general equilibrium conditions our findings indicate that the use of engineering savings instead of general equilibrium potential savings downward biases economy wide rebound effects and upward biases backfire effects the discrepancies between the traditional indicator and our proposed measure are analysed in the context of the spanish economy

trends in income and price elasticities of transport demand 1850 2010 the purpose of this paper is to estimate trends in income and price elasticities and to offer insights for the future growth in transport use with particular emphasis on the impact of energy and technological transitions the results indicate that income and price elasticities of passenger transport demand in the united kingdom were very large 3 1 and 1 5 respectively in the mid nineteenth century and declined since then in 2010 long run income and price elasticity of aggregate land transport demand were estimated to be 0 8 and 0 6 these trends suggest that future elasticities related to transport demand in developed economies may decline very gradually and in developing economies where elasticities are often larger they will probably decline more rapidly as the economies develop because of the declining trends in elasticities future energy and technological transitions are not likely to generate the growth rates in energy consumption that occurred following transitions in the nineteenth century nevertheless energy and technological transitions such as the car and the airplane appear to have delayed and probably will delay declining trends in income and price elasticity of aggregate land transport demand

do increases in energy efficiency improve environmental quality and sustainability governments world wide increasingly see energy efficiency as an important aspect of sustainability however there is a debate in the literature as to whether the impact of improved energy efficiency on reducing energy use might be partially or more than wholly offset through rebound and backfire effects this paper clarifies the theoretical conditions under which such effects would occur and explores their likely significance using a computable general equilibrium cge model of the scottish economy we find that for scotland a general improvement in energy efficiency in the production sectors of the economy initially produces rebound effects that eventually grow into backfire energy use ultimately increases in response to an efficiency gain and the ratio of gdp to co2 emissions falls the economic factors underpinning rebound effects are straightforward energy efficiency improvements result in an effective cut in energy prices which produces output substitution competitiveness and income effects that stimulate energy demands however the presence of strong rebound or even backfire does not mean that efficiency enhancing policies are irrelevant rather it suggests that such policies operating alone are insufficient to generate environmental improvements the implication is that a co ordinated portfolio of energy policies is required

the economics of distributed energy generation a literature review the uk electricity system is likely to face dramatic technical and institutional changes in the near future current uk energy policy focuses on the need for a clean affordable and secure energy supply decentralisation of the electricity system is recognised as one means of achieving efficient and renewable energy provision as well as addressing concerns over ageing electricity infrastructure and capacity constraints in this paper we provide a critical literature review of the economics of increased penetration of distributed energy generation we find that there exists a large volume of research considering the financial viability of individual distributed generation technologies and we are necessarily selective in our review of these studies given the wide variety of technologies that the definition of distributed generation encompasses however there are few studies that focus on the pure economics of individual or groups of distributed energy generators and even fewer still based on the economy wide aspects of distributed generation in view of this gap in the literature we provide suggestions for future research which are likely to be necessary in order adequately to inform public policy on distributed generation and its role in the future of uk energy supply

the added value from a general equilibrium analysis of increased efficiency in household energy use this paper investigates the economic impact of a 5 improvement in the uk household energy efficiency focussing specifically on total energy rebound effects the impact is measured through simulations using models that have increasing degrees of endogeneity but are calibrated on a common data set moving from a basic partial equilibrium approach to a fully specified general equilibrium treatment the size of the rebound effect is shown to depend on changes in household income aggregate economic activity and relative prices that can only be captured through a general equilibrium model

the microeconometric approach to modelling energy demand some results for uk households the paper is concerned with the empirical modeling of domestic demand for energy at the level of the individual household a model of household energy expenditures and energy using durable ownership is described estimation takes place using a pooled sample of households drawn from the repeated cross sections of the annual family expenditure survey fes price and income elasticities are found to be highly dependent on individual household characteristics type of house tenure energy using durable ownership and outside temperature finally the results are placed in a policy relevant context copyright 1991 by oxford university press

energy efficiency as an instrument of regional development policy the impact of regional fiscal autonomy this paper analyses the system wide impact of increased household energy efficiency in a regional context using scotland as an example it shows that household energy efficiency improvements typic

the impact of increased efficiency in the industrial use of energy a computable general equilibrium analysis for the united kingdom the conventional wisdom is that improving energy efficiency will lower energy use however there is an extensive debate in the energy economics policy literature concerning rebound effects these occur because an improvement in energy efficiency produces a fall in the effective price of energy services the response of the economic system to this price fall at least partially offsets the expected beneficial impact of the energy efficiency gain in this paper we use an economy energy environment computable general equilibrium cge model for the uk to measure the impact of a 5 across the board improvement in the efficiency of energy use in all production sectors we identify rebound effects of the order of 30 50 but no backfire no increase in energy use however these results are sensitive to the assumed structure of the labour market key production elasticities the time period under consideration and the mechanism through which increased government revenues are recycled back to the economy

the greenhouse effect the fallacies in the energy efficiency solution abstract the view that widespread improvements in energy efficiency can by themselves do anything to halt the build up of greenhouse gases around the globe is fundamentally unsound it is based on the same fallacies that underlie the claim that energy savings from improving efficiency can substitute for new energy supply the paper by keepin and kats1 claiming that per tonne of coal not burned improvements in energy efficiency are more cost effective than substituting nuclear for coal fired power is therefore an irrelevancy as far as this debate is concerned reductions is energy intensity of output that are not damaging to the economy are associated with increases not decreases in energy demand at the macroeconomic level even within the boundaries of their own flawed approach their attempt2 to refute the critique of their thesis made by jones3 was little more than misdirected grape shot with no discernable connected thread of argument

consumer side actions in a low carbon economy a dynamic cge analysis for spain abstract in recent decades the need to strengthen efforts to reduce ghg emissions to combat climate change has become a major global concern as reflected in the 2015 paris agreement and the eu climate strategy 2016 in this context eu countries are required to organize their contributions to environmental improvement through national strategies given the potential importance of demand side actions both directly and through their relationship with the productive system as well as the need for a dynamic evolution we assess the dynamic path and medium term environmental impact of certain consumer oriented measures using a dynamic computable general equilibrium cge model specifically we generate scenarios that follow spain s strategies and evaluate the dynamic impact of more efficient technologies on electricity consumption and the use of transport services both in terms of environmental ghg and sox and economic effects our results confirm the role of technology improvements in delivering positive results for the environment and the importance of economy wide rebound effects through a detailed study of energy uses as a result of efficiency improvements in household energy consumption our findings show that reductions in emissions per person are consistent with economic growth

distributional effects of alternative vehicle pollution control policies abstract previous work shows that policies that subsidize new vehicles and tax size miles or gasoline efficiently reduce pollution less is known about their distributional effects this paper examines distributional effects by estimating the joint demand for vehicles and miles using the consumer expenditure survey greater price responsiveness among low income households enhances progressivity of gas or miles taxes across lower incomes and mitigates regressivity across upper incomes taxes on engine size or subsidies to new vehicles are significantly more regressive than gas or miles taxes