2015/02/04 by Nathan W. Chan, Kenneth Gillingham · 1 voice · 2 citations
Energy · Environmental Science · #Energy Efficiency and Management #Energy, Environment, and Transportation Policies #Environmental Impact and Sustainability
paper · doi:10.1086/680256
openalex publication_date 2015/02/04 · openalex created_date 2025/10/10 · openalex updated_date 2026/06/27
Economists have long noted that improving energy efficiency could lead to a rebound effect, reducing or possibly even eliminating the energy savings from the efficiency improvement. This paper develops a generalized model to highlight features of the theory of the microeconomic rebound effect that are particularly relevant to empirical economists. We demonstrate when common elasticity identities used for empirical estimation are biased and how gross complement and substitute relationships govern this bias. Furthermore, we formally derive the welfare implications of the rebound effect to provide clarity for ongoing policy debates about the rebound.