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Abstract

This paper compares the performance of three related systems of input demand equations in their ability to model time-of-day electricity demand. They are derived from the Translog, Generalized Leontief, and the Quadratic- Squareroot flexible cost function specifications. The data used in the estimation are firm-level monthly observations of seven time differentiated electricity inputs. Linear demand equations are specified in order to facilitate the firm-level estimation. The assumption of symmetric separability so often employed in demand studies of this nature has been relaxed in favor of nonsymmetric separability which allows the substitution of non-electric inputs for electricity inputs. Comparisons of these specifications are made on the basis of the log-likelihood, in-sample prediction, and the precision of the price elasticity estimates. The results are reported for all firms combined and in terms of individual firm model comparisons.

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