IDEAS home Printed from
   My bibliography  Save this article

The economic value of LNG in the Korean manufacturing industry


  • Park, Sun-Young
  • Yoo, Seung-Hoon


Although LNG is an important input to industrial production for manufacturing firms, its economic value has been rarely investigated in the literature. This paper attempts to estimate the economic value of LNG in Korea's manufacturing sector by employing the concept of the value of marginal product (VMP). For this, we used data on 328 firms using LNG as an input. Two types of production functions (the Cobb–Douglas and trans-log functions) are applied. The result of the specification test indicates that the trans-log function is more appropriate for estimating the data. The output elasticity and VMP of industrial LNG are estimated to be 0.1346 and KRW 6844 (USD 6.22) per m3, respectively. The results have important implications for various areas of industrial LNG management. For example, any cost–benefit analysis of new projects providing industrial LNG requires information on the economic value of industrial LNG. In addition, such information is useful for the Korean government's future policies on LNG pricing.

Suggested Citation

  • Park, Sun-Young & Yoo, Seung-Hoon, 2013. "The economic value of LNG in the Korean manufacturing industry," Energy Policy, Elsevier, vol. 58(C), pages 403-407.
  • Handle: RePEc:eee:enepol:v:58:y:2013:i:c:p:403-407
    DOI: 10.1016/j.enpol.2013.03.031

    Download full text from publisher

    File URL:
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Abadie, Luis M. & Chamorro, José M., 2009. "Monte Carlo valuation of natural gas investments," Review of Financial Economics, Elsevier, vol. 18(1), pages 10-22, January.
    2. Dorigoni, Susanna & Portatadino, Sergio, 2008. "LNG development across Europe: Infrastructural and regulatory analysis," Energy Policy, Elsevier, vol. 36(9), pages 3366-3373, September.
    3. Kumar, Satish & Kwon, Hyouk-Tae & Choi, Kwang-Ho & Lim, Wonsub & Cho, Jae Hyun & Tak, Kyungjae & Moon, Il, 2011. "LNG: An eco-friendly cryogenic fuel for sustainable development," Applied Energy, Elsevier, vol. 88(12), pages 4264-4273.
    4. Edward B. Barbier, 2003. "The Role of Natural Resources in Economic Development," Australian Economic Papers, Wiley Blackwell, vol. 42(2), pages 253-272, June.
    5. Hua Wang & Somik Lall, 2002. "Valuing water for Chinese industries: a marginal productivity analysis," Applied Economics, Taylor & Francis Journals, vol. 34(6), pages 759-765.
    6. Yoo, Seung-Hoon & Lim, Hea-Jin & Kwak, Seung-Jun, 2009. "Estimating the residential demand function for natural gas in Seoul with correction for sample selection bias," Applied Energy, Elsevier, vol. 86(4), pages 460-465, April.
    7. Kumar, Satish & Kwon, Hyouk-Tae & Choi, Kwang-Ho & Hyun Cho, Jae & Lim, Wonsub & Moon, Il, 2011. "Current status and future projections of LNG demand and supplies: A global prospective," Energy Policy, Elsevier, vol. 39(7), pages 4097-4104, July.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Almansoori, Ali, 2014. "The influence of South Korean energy policy on OPEC oil exports," Energy Policy, Elsevier, vol. 67(C), pages 572-582.
    2. Park, Eunil & Kwon, Sang Jib, 2016. "Solutions for optimizing renewable power generation systems at Kyung-Hee University׳s Global Campus, South Korea," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 439-449.
    3. repec:gam:jsusta:v:10:y:2018:i:7:p:2239-:d:155174 is not listed on IDEAS
    4. Lim, Seul-Ye & Kim, Hyo-Jin & Yoo, Seung-Hoon, 2016. "The demand function for residential heat through district heating system and its consumption benefits in Korea," Energy Policy, Elsevier, vol. 97(C), pages 155-160.
    5. repec:gam:jsusta:v:10:y:2018:i:6:p:1830-:d:150164 is not listed on IDEAS
    6. So-Yeon Park & Seul-Ye Lim & Seung-Hoon Yoo, 2016. "The Economic Value of the National Meteorological Service in the Korean Household Sector: A Contingent Valuation Study," Sustainability, MDPI, Open Access Journal, vol. 8(9), pages 1-13, August.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:58:y:2013:i:c:p:403-407. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.