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Materials, Capital, Direct/Indirect Substitution and Mass Balance Production Functions

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  • Jeroen C.J.M. van den Bergh

    (Vrije Universiteit Amsterdam)

Abstract

A foundation is provided for a correct and accurate analysis of the relationship between monetary values and physical dimensions in economic production. A distinction is proposed between direct and indirect substitution. Linked to this, a classification is offered of various types of substitutability and complementarity relationships between production factors. It is argued that the neoclassical production function may be consistent with mass balance, but is unsuitable for a detailed and accurate understanding of changes in production that influence materials use. For this purpose, general production functions satisfying mass balance are formulated, drawing upon the proposed classifications. This discussion paper has resulted in a publication in Land Economics , 1999, 75(4), 547-561.

Suggested Citation

  • Jeroen C.J.M. van den Bergh, 1998. "Materials, Capital, Direct/Indirect Substitution and Mass Balance Production Functions," Tinbergen Institute Discussion Papers 98-065/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:19980065
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    2. Robert U. Ayres & Jeroen C.J.M. van den Bergh, 2000. "The Role of Material/Energy Resources and Dematerialisation in Economic Growth Theories," Tinbergen Institute Discussion Papers 00-068/3, Tinbergen Institute.
    3. Ayres, Robert U. & van den Bergh, Jeroen C.J.M., 2005. "A theory of economic growth with material/energy resources and dematerialization: Interaction of three growth mechanisms," Ecological Economics, Elsevier, vol. 55(1), pages 96-118, October.
    4. Couix, Quentin, 2020. "Georgescu-Roegen's Flow-Fund Theory of Production in Retrospect," Ecological Economics, Elsevier, vol. 176(C).
    5. Kemp-Benedict, Eric, 2014. "The inverted pyramid: A neo-Ricardian view on the economy–environment relationship," Ecological Economics, Elsevier, vol. 107(C), pages 230-241.
    6. David I. Stern, 2010. "The Role of Energy in Economic Growth," CCEP Working Papers 0310, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    7. Forsund, Finn R., 2009. "Good Modelling of Bad Outputs: Pollution and Multiple-Output Production," International Review of Environmental and Resource Economics, now publishers, vol. 3(1), pages 1-38, August.
    8. Figge, Frank & Hahn, Tobias, 2004. "Sustainable Value Added--measuring corporate contributions to sustainability beyond eco-efficiency," Ecological Economics, Elsevier, vol. 48(2), pages 173-187, February.

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    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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