IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v67y2014icp213-222.html
   My bibliography  Save this article

Energy substitution effect on transport industry of China-based on trans-log production function

Author

Listed:
  • Lin, Boqiang
  • Xie, Chunping

Abstract

China is currently in the stage of industrialization and urbanization, which is characterized by rigid energy demand and rapid growth of energy consumption. China's transport industry is of high energy consumption and high pollution. Therefore, energy issues in the industry are particularly of concern to all parties. In this paper, a trans-log production function model for China's transport industry is established and input factors of capital, energy and labor are included. Output elasticity of each factor and substitution elasticity between the variables are analyzed. Results show that: during the period 1980–2010, there is a relatively high elasticity of substitution (the value is around 1.05–1.07) between energy factor and labor factor in China's transport sector; significant elasticity of substitution between capital factor and energy factor exists as well (the value is about 0.98–1.00). It suggests that the substitution between energy and labor could be achieved by continuously upgrading technology. Through allocating more capital into transport industry, relevant energy saving technology could be continuously promoted and the substitution between capital and energy will also be realized. The transition of Chinese transport industry from labor-intensive to capital-intensive is a significant trend.

Suggested Citation

  • Lin, Boqiang & Xie, Chunping, 2014. "Energy substitution effect on transport industry of China-based on trans-log production function," Energy, Elsevier, vol. 67(C), pages 213-222.
    • Handle: RePEc:eee:energy:v:67:y:2014:i:c:p:213-222
    DOI: 10.1016/j.energy.2013.12.045
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544213011158
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2013.12.045?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

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

    References listed on IDEAS

    as
    1. Fan, Ying & Liao, Hua & Wei, Yi-Ming, 2007. "Can market oriented economic reforms contribute to energy efficiency improvement? Evidence from China," Energy Policy, Elsevier, vol. 35(4), pages 2287-2295, April.
    2. Truong, Truong P, 1985. "Inter-fuel and Inter-factor Substitution in NSW Manufacturing Industry," The Economic Record, The Economic Society of Australia, vol. 61(174), pages 644-653, September.
    3. Smyth, Russell & Narayan, Paresh Kumar & Shi, Hongliang, 2011. "Substitution between energy and classical factor inputs in the Chinese steel sector," Applied Energy, Elsevier, vol. 88(1), pages 361-367, January.
    4. Zhou, Guanghui & Chung, William & Zhang, Xiliang, 2013. "A study of carbon dioxide emissions performance of China's transport sector," Energy, Elsevier, vol. 50(C), pages 302-314.
    5. Han, Zhi-Yong & Fan, Ying & Jiao, Jian-Ling & Yan, Ji-Sheng & Wei, Yi-Ming, 2007. "Energy structure, marginal efficiency and substitution rate: An empirical study of China," Energy, Elsevier, vol. 32(6), pages 935-942.
    6. Griffin, James M & Gregory, Paul R, 1976. "An Intercountry Translog Model of Energy Substitution Responses," American Economic Review, American Economic Association, vol. 66(5), pages 845-857, December.
    7. Thompson, Peter & Taylor, Timothy G, 1995. "The Capital-Energy Substitutability Debate: A New Look," The Review of Economics and Statistics, MIT Press, vol. 77(3), pages 565-569, August.
    8. Berndt, Ernst R & Wood, David O, 1979. "Engineering and Econometric Interpretations of Energy-Capital Complementarity," American Economic Review, American Economic Association, vol. 69(3), pages 342-354, June.
    9. Christopoulos, Dimitris K., 2000. "The demand for energy in Greek manufacturing," Energy Economics, Elsevier, vol. 22(5), pages 569-586, October.
    10. Griffin, James M, 1981. "Engineering and Econometric Interpretations of Energy-Capital Complementarity: Comment," American Economic Review, American Economic Association, vol. 71(5), pages 1100-1104, December.
    11. Lin, Boqiang & Yang, Fang & Liu, Xia, 2013. "A study of the rebound effect on China's current energy conservation and emissions reduction: Measures and policy choices," Energy, Elsevier, vol. 58(C), pages 330-339.
    12. Pindyck, Robert S, 1979. "Interfuel Substitution and the Industrial Demand for Energy: An International Comparison," The Review of Economics and Statistics, MIT Press, vol. 61(2), pages 169-179, May.
    13. Gregory C. Chow, 1993. "Capital Formation and Economic Growth in China," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 809-842.
    14. Hang, Leiming & Tu, Meizeng, 2007. "The impacts of energy prices on energy intensity: Evidence from China," Energy Policy, Elsevier, vol. 35(5), pages 2978-2988, May.
    15. Lin, Boqiang & Wesseh, Presley K., 2013. "Estimates of inter-fuel substitution possibilities in Chinese chemical industry," Energy Economics, Elsevier, vol. 40(C), pages 560-568.
    16. Fuss, Melvyn A., 1977. "The demand for energy in Canadian manufacturing : An example of the estimation of production structures with many inputs," Journal of Econometrics, Elsevier, vol. 5(1), pages 89-116, January.
    17. Liu, Wen & Lund, Henrik & Mathiesen, Brian Vad, 2013. "Modelling the transport system in China and evaluating the current strategies towards the sustainable transport development," Energy Policy, Elsevier, vol. 58(C), pages 347-357.
    18. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    19. Bentzen, Jan, 2004. "Estimating the rebound effect in US manufacturing energy consumption," Energy Economics, Elsevier, vol. 26(1), pages 123-134, January.
    20. Yan, Xiaoyu & Crookes, Roy J., 2009. "Reduction potentials of energy demand and GHG emissions in China's road transport sector," Energy Policy, Elsevier, vol. 37(2), pages 658-668, February.
    21. Hu, Xiaojun & Chang, Shiyan & Li, Jingjie & Qin, Yining, 2010. "Energy for sustainable road transportation in China: Challenges, initiatives and policy implications," Energy, Elsevier, vol. 35(11), pages 4289-4301.
    22. Ma, Hengyun & Oxley, Les & Gibson, John, 2009. "Substitution possibilities and determinants of energy intensity for China," Energy Policy, Elsevier, vol. 37(5), pages 1793-1804, May.
    23. Lindenberger, Dietmar & Kümmel, Reiner, 2011. "Energy and the state of nations," Energy, Elsevier, vol. 36(10), pages 6010-6018.
    24. Berndt, Ernst R & Wood, David O, 1975. "Technology, Prices, and the Derived Demand for Energy," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 259-268, August.
    25. Zhang, Ming & Mu, Hailin & Li, Gang & Ning, Yadong, 2009. "Forecasting the transport energy demand based on PLSR method in China," Energy, Elsevier, vol. 34(9), pages 1396-1400.
    26. 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.
    27. Lin, Boqiang & Xie, Chunping, 2013. "Estimation on oil demand and oil saving potential of China's road transport sector," Energy Policy, Elsevier, vol. 61(C), pages 472-482.
    28. Su, Xuanming & Zhou, Weisheng & Nakagami, Ken'Ichi & Ren, Hongbo & Mu, Hailin, 2012. "Capital stock-labor-energy substitution and production efficiency study for China," Energy Economics, Elsevier, vol. 34(4), pages 1208-1213.
    29. Prywes, Menahem, 1986. "A nested CES approach to capital-energy substitution," Energy Economics, Elsevier, vol. 8(1), pages 22-28, January.
    30. Berndt, Ernst R & Khaled, Mohammed S, 1979. "Parametric Productivity Measurement and Choice among Flexible Functional Forms," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1220-1245, December.
    31. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. He, Yongda & Lin, Boqiang, 2019. "Heterogeneity and asymmetric effects in energy resources allocation of the manufacturing sectors in China," Energy, Elsevier, vol. 170(C), pages 1019-1035.
    2. Khalid, Waqar & Özdeşer, Hüseyin & Jalil, Abdul, 2021. "An empirical analysis of inter-factor and inter-fuel substitution in the energy sector of Pakistan," Renewable Energy, Elsevier, vol. 177(C), pages 953-966.
    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. Lin, Boqiang & Ahmad, Izhar, 2016. "Energy substitution effect on transport sector of Pakistan based on trans-log production function," Renewable and Sustainable Energy Reviews, Elsevier, vol. 56(C), pages 1182-1193.
    5. Dong Hee Suh, 2015. "Declining Energy Intensity in the U.S. Agricultural Sector: Implications for Factor Substitution and Technological Change," Sustainability, MDPI, vol. 7(10), pages 1-14, September.
    6. Xie, Chunping & Hawkes, Adam D., 2015. "Estimation of inter-fuel substitution possibilities in China's transport industry using ridge regression," Energy, Elsevier, vol. 88(C), pages 260-267.
    7. Lin, Boqiang & Atsagli, Philip & Dogah, Kingsley E., 2016. "Ghanaian energy economy: Inter-production factors and energy substitution," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 1260-1269.
    8. Valeria Costantini & Francesco Crespi & Elena Paglialunga, 2019. "Capital–energy substitutability in manufacturing sectors: methodological and policy implications," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 9(2), pages 157-182, June.
    9. Pablo-Romero, María del P. & Sánchez-Braza, Antonio, 2015. "Productive energy use and economic growth: Energy, physical and human capital relationships," Energy Economics, Elsevier, vol. 49(C), pages 420-429.
    10. Suh, Dong Hee, 2015. "Identifying Factor Substitution and Energy Intensity in the U.S. Agricultural Sector," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205264, Agricultural and Applied Economics Association.
    11. Lin, Boqiang & Atsagli, Philip, 2017. "Inter-fuel substitution possibilities in South Africa: A translog production function approach," Energy, Elsevier, vol. 121(C), pages 822-831.
    12. Valeria Costantini & Elena Paglialunga, 2014. "Elasticity of substitution in capital-energy relationships: how central is a sector-based panel estimation approach?," SEEDS Working Papers 1314, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised May 2014.
    13. 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.
    14. Hepburn, Cameron & Teytelboym, Alexander & Cohen, Francois, 2018. "Is Natural Capital Really Substitutable?," INET Oxford Working Papers 2018-12, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    15. Bello, Mufutau Opeyemi & Solarin, Sakiru Adebola & Yen, Yuen Yee, 2018. "Hydropower and potential for interfuel substitution: The case of electricity sector in Malaysia," Energy, Elsevier, vol. 151(C), pages 966-983.
    16. Sharimakin, Akinsehinwa, 2019. "Measuring the energy input substitution and output effects of energy price changes and the implications for the environment," Energy Policy, Elsevier, vol. 133(C).
    17. Lin, Boqiang & Long, Houyin, 2016. "Input substitution effect in China׳s chemical industry: Evidences and policy implications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 1617-1625.
    18. Liu, Kui & Bai, Hongkun & Yin, Shuo & Lin, Boqiang, 2018. "Factor substitution and decomposition of carbon intensity in China's heavy industry," Energy, Elsevier, vol. 145(C), pages 582-591.
    19. Wang, Ailun & Lin, Boqiang, 2020. "Structural optimization and carbon taxation in China's commercial sector," Energy Policy, Elsevier, vol. 140(C).
    20. David I. Stern, 2012. "Interfuel Substitution: A Meta‐Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 26(2), pages 307-331, April.

    Corrections

    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:energy:v:67:y:2014:i:c:p:213-222. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.