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Energy Prices and the Adoption of Energy-Saving Technology

Joshua Linn

The Economic Journal, Vol. 118, No. 533, pp. 1986-2012, 2008

Joshua Linn, The Economic Journal, Vol. 118, No. 533, pp. 1986-2012, 2008

This article investigates the link between factor prices, technology and factor demands. Using plantlevel data from the Census of Manufactures, I compare the energy intensity of entrants and incumbents from 196797. A 10% increase in the price of energy reduces the relative energy intensity of entrants by 1%. The estimate implies that technology adoption by incumbents explains a statistically significant but relatively small fraction of changes in aggregate energy demand in the 1970s and 1980s. Furthermore, entrants_ technology adoption can reduce the long run effect of energy prices on growth, but by less than previous research has found.

(Also published as CEEPR WP 2006-012)

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