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ID: 150899

Assessing the rebound effect using a natural experiment setting: evidence from the private transportation sector in Israel / Steren, Aviv; Rubin, Ofir D ; Rosenzweig, Stav

Rubin, Ofir D	Journal Article
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Summary/Abstract

Subsidizing energy-efficient technologies is considered by energy and environmental organizations to be one of the most effective policies for decreasing energy consumption. In the transportation sector such policies are becoming ever more popular, and have been implemented in a considerable number of countries in recent years. Because these policies promote energy-efficient cars with lower usage costs, they may rebound and increase the distances traveled by households that have switched to energy-efficient cars. From an econometric perspective, a subsidization policy can be used as a valid instrument to identify the households’ choice of energy efficiency levels of the cars they own. This identification, in turn, can be utilized to account for endogeneity in the estimation of a rebound effect. The present study uses a natural experiment setting of such a policy implemented in Israel in 2009. The empirical results indicate a fairly large average rebound effect of 40%. The results also indicate that while the policy indeed encouraged the purchase of energy-efficient cars, households that bought a new or used car during the surveyed period did not generate a rebound effect of a different magnitude compared with other households that did not. We discuss the implications of our findings.

Key Words

Energy Efficiency ; Rebound Effect ; Technology Subsidy ; Fuel Pricing Policy

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ID: 104944

Novel approach for modeling deregulated electricity markets / Rubin, Ofir D; Babcock, Bruce A

Babcock, Bruce A	Journal Article
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Publication

2011.

Summary/Abstract

The theoretical framework developed in this study allows development of a model of deregulated electricity markets that explains two familiar empirical findings; the existence of forward premiums and price-cost markups in the spot market. This is a significant contribution because electricity forward premiums have been previously explained exclusively by the assumptions of perfect competition and risk-averse behavior while spot markups are generally the outcome of a body of literature assuming oligopolistic competition. Our theoretical framework indicates that a certain premium for forward contracting is required for efficient allocation of generation capacity. However, due to the uniqueness of electricity and the design of deregulated electricity markets this premium might be substantially higher than its optimal level.

Key Words

Oligopoly Pricing ; Deregulated Electricity Markets ; Electricity Forward Premium

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