General Equilibrium Rebound from Energy Efficiency Innovation

41 Pages Posted: 22 Oct 2018

See all articles by Derek Lemoine

Derek Lemoine

University of Arizona - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 2018

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 the cost of non-energy inputs to production. Improvements in energy efficiency are especially likely to increase total energy use when they arise in the energy supply sector because they make energy inputs cheaper in all other sectors. When energy and non-energy inputs are substitutes (complements), innovators often direct research efforts towards those consumption good sectors where improvements in efficiency are especially likely to increase (decrease) total energy use.

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Suggested Citation

Lemoine, Derek, General Equilibrium Rebound from Energy Efficiency Innovation (October 2018). NBER Working Paper No. w25172. Available at SSRN: https://ssrn.com/abstract=3270722

Derek Lemoine (Contact Author)

University of Arizona - Department of Economics ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States

HOME PAGE: http://www.dereklemoine.com/

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