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Interfuel Substitution: A Meta-Analysis

Stern, David I. (2009): Interfuel Substitution: A Meta-Analysis.

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Abstract

As is the case with capital-energy substitution, interfuel substitutability has been of longstanding interest to the energy economics and policy community. However, no quantitative meta-analysis has yet been carried out of this literature. This paper fills this gap by analyzing a broad sample of studies of interfuel substitution in the industrial sector, manufacturing industry or subindustries, or macro-economy of a variety of developed and developing economies. Publication bias is controlled for by including the primary study sample size and the influence factor of the journal in the meta-regression. Results for the shadow elasticity of substitution between coal, oil, gas, and electricity for forty-five primary studies show that there are easy substitution possibilities between all the fuel pairs with the exception of gas and electricity. Model and data specification issues very significantly affect the estimates derived by each individual study. While publication bias does not seem to be present there is a relationship between sample size and the value of the elasticities with larger sample studies finding greater values of the elasticities.

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