Energy Intensity and Firm Performance: Do Energy Clusters Matter?
According to the basic law of supply and demand, as the cost of energy input rises, ceteris paribus, producer prefers to employ smaller quantity of energy input and substitute cheaper inputs for more expensive energy during the production process (Schurr, 1982; Jorgenson, 1984). Hence, the question arises whether determinants of profitability of firms differ based on different types of energy consumption. In analyzing this phenomenon for Indian manufacturing industries, this study tries to find out the determinants of profitability of firms based on three energy clusters (natural gas, petroleum and coal) of Indian manufacturing industries. This study uses data from the PROWESS database provided by the Center for Monitoring Indian Economy from 2000-2008. The finding of the study suggests that capital intensity, age of the firm and MNE affiliation of firms are the common determinants of profitability for different energy clusters in Indian manufacturing industries. However, the determinants of profitability differ for variables such as energy intensity, size of firm and R&D intensity and based on the choice of primary source of energy consumption. In the debate of CDM, climate change; shifting from traditional fuel sources to recent fuel source might help in reducing CO2 emissions, specifically for developing country such as India. Fiscal policies support to industries such as value-added tax exemption for new energy conservation products, import duty reduction and exemption for energy conservation technology might help Indian manufacturing industries to increase the profitability as well as energy efficiency.
|Date of creation:||10 Nov 2011|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jan Oosterhaven & Dirk Stelder, 2002. "Net Multipliers Avoid Exaggerating Impacts: With A Bi-Regional Illustration for the Dutch Transportation Sector," Journal of Regional Science, Wiley Blackwell, vol. 42(3), pages 533-543.
- Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1999.
"The Induced Innovation Hypothesis And Energy-Saving Technological Change,"
The Quarterly Journal of Economics,
MIT Press, vol. 114(3), pages 941-975, August.
- Stavins, Robert & Jaffe, Adam & Newell, Richard, 1998. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," Discussion Papers dp-98-12-rev, Resources For the Future.
- Richard G. Newell & Adam B. Jaffe & Robert N. Stavins, 1998. "The Induced Innovation Hypothesis and Energy-Saving Technological Change," NBER Working Papers 6437, National Bureau of Economic Research, Inc.
- Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, vol. 189(1), pages 1-18, August.
- Christina M. L. Kelton & Margaret K. Pasquale & Robert P. Rebelein, 2008. "Using the North American Industry Classification System (NAICS) to Identify National Industry Cluster Templates for Applied Regional Analysis," Regional Studies, Taylor & Francis Journals, vol. 42(3), pages 305-321, April.
- Lassaad Lachaal & Boubaker Karray & Boubaker Dhehibi & Ali Chebil, 2005. "Technical Efficiency Measures and Its Determinants for Olive Producing Farms in Tunisia: A Stochastic Frontier Analysis," African Development Review, African Development Bank, vol. 17(3), pages 580-591.
- Antonio Couto & Daniel Graham, 2009. "The determinants of efficiency and productivity in European railways," Applied Economics, Taylor & Francis Journals, vol. 41(22), pages 2827-2851.
- Rose, A. & Chen, C. Y., 1991. "Sources of change in energy use in the U.S. economy, 1972-1982 : A structural decomposition analysis," Resources and Energy, Elsevier, vol. 13(1), pages 1-21, April.
- Roberts, Mark J & Tybout, James R, 1997. "The Decision to Export in Colombia: An Empirical Model of Entry with Sunk Costs," American Economic Review, American Economic Association, vol. 87(4), pages 545-64, September.
- Henri L.F.M. de Groot & Erik T. Verhoef & Peter Nijkamp, 1999.
"Energy Saving by Firms: Decision-Making, Barriers and Policies,"
Tinbergen Institute Discussion Papers
99-031/3, Tinbergen Institute.
- de Groot, Henri L. F. & Verhoef, Erik T. & Nijkamp, Peter, 2001. "Energy saving by firms: decision-making, barriers and policies," Energy Economics, Elsevier, vol. 23(6), pages 717-740, November.
- Gilbert E. Metcalf, 2008. "An Empirical Analysis of Energy Intensity and Its Determinants at the State Level," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-26.
- Edward Oczkowski & Kishor Sharma, 2005. "Determinants of Efficiency in Least Developed Countries: Further Evidence from Nepalese Manufacturing Firms," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 617-630.
- Kessides, Ioannis N, 1990. "Internal versus External Market Conditions and Firm Profitability: An Exploratory Model," Economic Journal, Royal Economic Society, vol. 100(402), pages 773-92, September.
- Sue Wing, Ian, 2008. "Explaining the declining energy intensity of the U.S. economy," Resource and Energy Economics, Elsevier, vol. 30(1), pages 21-49, January.
- Chari, Sharad, 2000. "The Agrarian Origins of the Knitwear Industrial Cluster in Tiruppur, India," World Development, Elsevier, vol. 28(3), pages 579-599, March.
- Andrew B. Bernard & J. Bradford Jensen, 2001.
"Why Some Firms Export,"
NBER Working Papers
8349, National Bureau of Economic Research, Inc.
- Cornillie, Jan & Fankhauser, Samuel, 2004. "The energy intensity of transition countries," Energy Economics, Elsevier, vol. 26(3), pages 283-295, May.
- Hirschey, Mark & Wichern, Dean W, 1984. "Accounting and Market-Value Measures of Profitability: Consistency, Determinants, and Uses," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 375-83, October.
- Valentin Zelenyuk & Vitaliy Zheka, 2006. "Corporate Governance and Firm’s Efficiency: The Case of a Transitional Country, Ukraine," Journal of Productivity Analysis, Springer, vol. 25(1), pages 143-157, 04.
- Sahu, Santosh & Narayanan, K, 2010. "Determinants of Energy Intensity in Indian Manufacturing Industries: A Firm Level Analysis," MPRA Paper 21646, University Library of Munich, Germany.
- Faruq Hasan A & Yi David T., 2010. "The Determinants of Technical Efficiency of Manufacturing Firms in Ghana," Global Economy Journal, De Gruyter, vol. 10(3), pages 1-23, October.
- Sahu, Santosh & Narayanan, K, 2009. "Determinants of Energy Intensity: A Preliminary Investigation of Indian Manufacturing," MPRA Paper 16606, University Library of Munich, Germany.
- Lenzen, Manfred, 2003. "Environmentally important paths, linkages and key sectors in the Australian economy," Structural Change and Economic Dynamics, Elsevier, vol. 14(1), pages 1-34, March.
- Sam H. Schurr, 1982. "Energy Efficiency and Productive Efficiency: Some Thoughts Based on American Experience," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 3-14.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:43457. 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: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.