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Elasticity of Substitution, Price Effect and Sustainable Fertilizer Use: A Translog and SUR Analysis in China

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  • Yipu Pang
  • Jingqi Dang
  • Wei Xu

Abstract

Fertilizer has brought great pressure to sustainable ecological environment. Research on the effect of price on fertilizer use as well as the substitution relationship of fertilizer and other input factors of agricultural production is of great importance for green, efficient, and intensive agricultural production in the world. This study first constructs translog cost functions and models of elasticity, then uses the factor input and price data from 2004 to 2016 to measure the price elasticity of fertilizer demand, and the elasticity of factor substitution in China's maize and cabbage production. The results suggest that: the price elasticity of fertilizer demand is in a low elasticity range; there is a compensation relationship between fertilizer and labour and a substitution relationship between fertilizer and machinery in China's maize production, while these relationships in China's cabbage production are opposite.

Suggested Citation

  • Yipu Pang & Jingqi Dang & Wei Xu, 2021. "Elasticity of Substitution, Price Effect and Sustainable Fertilizer Use: A Translog and SUR Analysis in China," Prague Economic Papers, Prague University of Economics and Business, vol. 2021(2), pages 189-215.
    • Handle: RePEc:prg:jnlpep:v:2021:y:2021:i:2:id:764:p:189-215
    DOI: 10.18267/j.pep.764
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    References listed on IDEAS

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    1. Paolo Bertoletti, 2005. "Elasticities of Substitution and Complementarity: A Synthesis," Journal of Productivity Analysis, Springer, vol. 24(2), pages 183-196, October.
    2. Tahirou Abdoulaye & John H. Sanders, 2005. "Stages and determinants of fertilizer use in semiarid African agriculture: the Niger experience," Agricultural Economics, International Association of Agricultural Economists, vol. 32(2), pages 167-179, March.
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    More about this item

    Keywords

    Elasticity of substitution; price effect; sustainable fertilizer use; translog; SUR;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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