Journal
ENERGY ECONOMICS
Volume 45, Issue -, Pages 501-510Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.eneco.2014.08.003
Keywords
Factor demand; Substitution between energy and capital; Firm-level panel data
Categories
Ask authors/readers for more resources
We use a translog cost function to model production in the Irish manufacturing sector over the period from 1991 to 2009. We estimate both own- and cross-price elasticities and Morishima elasticities of substitution between capital, labour, materials and energy. We find that capital and energy are substitutes in the production process. Across all firms we find that a 1% rise in the price of energy is associated with an increase of 0.04% in the demand for capital. The Morishima elasticities, which reflect the technological substitution potential, indicate that a 1% increase in the price of energy causes the capital/energy input ratio to increase by 1.5%. The demand for capital in energy-intensive firms is more responsive to increases in energy prices, while it is less responsive in foreignowned firms. We also observe a sharp decline in firms' responsiveness in the first half of the sample period. (C) 2014 Elsevier B.V. All rights reserved.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available