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Abstract
Horticultural firms are dependent on energy to produce, while policy makers focus on reducing
the use of energy and investment in energy-saving technologies. The paper aimed to asses
Dutch greenhouse farmers‘ responses to policies that would affect prices of different energy
inputs. The farmer’s behaviour is modelled in two steps: firms are assumed to maximize profit
at given energy use level, and firms are assumed to minimize the discounted sum of energy
costs. The model is estimated using farm survey data spanning the period 2001-2008. Short-run
and long-run elasticities with respect to prices and investments in energy-using technology are
estimated. The greenhouse sector shows a fast adjustment of energy capital towards its long-run
equilibrium. This model provides a framework for assessing policy simulations. Policies will not
have much more impact in the long-run compared to the short-run, and incentives to invest
would result in an increase of the use of energy-saving technologies