Combining A Demand System With The Household Production Approach: Modelling Energy Demand In Selected European Countries

This paper sets up a model of private consumption for selected EU countries with special emphasis on the impact of energy efficiency on energy demand. Starting point for the analysis is the idea that consumers' demand is a combination of a demand for 'Services' with a technological component. Demand for services is derived from utility maximization or cost minimization and actual energy (commodity) demand stems from a household production process. The model indirectly takes into account the impact of capital stocks and technology on energy demand and all the different links between services and goods demand.