Limited empirical evidence of optimizing behaviour

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A second remark concerns the postulated optimizing behaviour of neoclassical microeconomic analysis. Energy costs in industrialized economies on the aggregate level comprise only 2-4 per cent of production costs. The share of energy costs is considerably higher in the basic industries which typically contribute less than 20 per cent to industrial GDP but require about three-quarters of industrial energy consumption. For households, expenses for energy are typically less than 10 per cent of their consumer budget. These comparatively low shares of energy costs can be traced as a main reason why we observe a large potential for energy savings which would even reduce energy costs for the individual decision-maker. In many cases, however, optimizing behaviour faces institutional barriers. Electric utilities prevent companies from applying cogeneration technologies by offering unattractive rates for surplus electricity. Households may want to reduce their heating bills by improving the thermal quality of an apartment but face problems if the tenant is different from the owner.

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