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Energy and the non-energy inputs substitution: evidence for Italy, Portugal and Spain

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  • Medina, J.
  • Vega-Cervera, J. A.

Abstract

The factor demand is modeled for Italy, Portugal and Spain. We estimated a translog cost function with capital, labor and energy over the 1980-1996 period. Our objective regarding energy as input was two-fold: on the one hand, to verify its incorporation as a productive factor, and, on the other, to observe its degree of substitutability with the other classical factors, given the high level of energy dependency of these countries. Using a separability test and confidence intervals for the Allen and price elasticities, our estimates confirmed both the non-separability of the energy input and the existence of consistent substitution between energy and labor only for Italy.

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  • Medina, J. & Vega-Cervera, J. A., 2001. "Energy and the non-energy inputs substitution: evidence for Italy, Portugal and Spain," Applied Energy, Elsevier, vol. 68(2), pages 203-214, February.
    • Handle: RePEc:eee:appene:v:68:y:2001:i:2:p:203-214
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    References listed on IDEAS

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    Cited by:

    1. Elena Lagomarsino & Karen Turner, 2017. "Is the production function Translog or CES? An empirical illustration using UK data," Working Papers 1713, University of Strathclyde Business School, Department of Economics.
    2. Zha, Donglan & Zhou, Dequn, 2014. "The elasticity of substitution and the way of nesting CES production function with emphasis on energy input," Applied Energy, Elsevier, vol. 130(C), pages 793-798.
    3. Kim, Jihyo & Heo, Eunnyeong, 2013. "Asymmetric substitutability between energy and capital: Evidence from the manufacturing sectors in 10 OECD countries," Energy Economics, Elsevier, vol. 40(C), pages 81-89.
    4. Bardazzi, Rossella & Oropallo, Filippo & Pazienza, Maria Grazia, 2015. "Do manufacturing firms react to energy prices? Evidence from Italy," Energy Economics, Elsevier, vol. 49(C), pages 168-181.
    5. Bölük, Gülden & Koç, A. Ali, 2010. "Electricity demand of manufacturing sector in Turkey: A translog cost approach," Energy Economics, Elsevier, vol. 32(3), pages 609-615, May.
    6. Koetse, Mark J. & de Groot, Henri L.F. & Florax, Raymond J.G.M., 2008. "Capital-energy substitution and shifts in factor demand: A meta-analysis," Energy Economics, Elsevier, vol. 30(5), pages 2236-2251, September.
    7. Llop, Maria, 2020. "Energy import costs in a flexible input-output price model," Resource and Energy Economics, Elsevier, vol. 59(C).
    8. Lagomarsino, Elena, 2020. "Estimating elasticities of substitution with nested CES production functions: Where do we stand?," Energy Economics, Elsevier, vol. 88(C).

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