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Residential demand for energy commodities : A household production function approach |
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| Authors: | Keith D. Willett associate professor of economics Shahdad Naghshpour assistant professor of economics |
| Affiliation: | 1. College of Business Administration, Oklahoma State University, Stillwater, OK 74078, USA;2. University of Southern Mississippi, Gulf Park, MS 39560, USA;1. Federal Reserve Bank of St. Louis, United States;2. University of Richmond, United States;1. University of Rome Tor Vergata, CEIS Tor Vergata, Italy;2. CHP-PCOR Stanford University, United States;3. Hunter College, United States;4. The Graduate Center, CUNY, United States;5. NBER, United States;6. CEIS, University of Rome Tor Vergata, Italy |
| Abstract: | This paper formulates a demand model for energy commodities using a household production function approach. The model is stated in a utility maximization framework where utility is assumed to be a function of two composite commodities directly yielding utility. Electricity and natural gas are used as inputs along with a capital stock to produce one of the utility-yielding commodities. The other utility-yielding commodity is assumed to be produced with two non-energy goods and capital stock which are purchased on the market. The Kuhn-Tucker conditions are then used to characterize the optimal time paths for input purchases and investments by the household. |
| Keywords: | Energy commodities Household sector Demand model |
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