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Capital-Energy Substitution: Evidence from a Panel of Irish Manufacturing Firms

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  • Stefanie Haller
  • Marie Hyland

Abstract

Using firm-level data from the Irish Census of Industrial Production for the period from 1991-2009, we look at how Irish manufacturing firms adjust their input mix in response to changing energy prices. We find that an increase in the price of energy causes the demand for energy inputs to fall, while the demand for capital, material and labour inputs rises. This indicates that the other factors of production are substitutable with energy in the Irish manufacturing sector.

Suggested Citation

  • Stefanie Haller & Marie Hyland, 2014. "Capital-Energy Substitution: Evidence from a Panel of Irish Manufacturing Firms," Open Access publications 10197/8608, School of Economics, University College Dublin.
  • Handle: RePEc:ucn:oapubs:10197/8608
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    File URL: http://hdl.handle.net/10197/8608
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    References listed on IDEAS

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    Cited by:

    1. Ouyang, Xiaoling & Sun, Chuanwang, 2015. "Energy savings potential in China's industrial sector: From the perspectives of factor price distortion and allocative inefficiency," Energy Economics, Elsevier, vol. 48(C), pages 117-126.
    2. repec:eee:enepol:v:130:y:2019:i:c:p:320-327 is not listed on IDEAS
    3. Elena Lagomarsino & Karen Turner, 2017. "Is the production function Translog or CES? An empirical illustration using UK data," Working Papers 1713, University of Strathclyde Business School, Department of Economics.
    4. Curtis, John & Devitt, Niamh & di Cosmo, Valeria & Farrell, Niall & FitzGerald, John & Hyland, Marie & Lynch, Muireann & Lyons, Sean & McCoy, Daire & Malaguzzi Valeri, Laura & Walsh, Darragh, 2014. "Irish Energy Policy: An Analysis of Current Issues," Research Series, Economic and Social Research Institute (ESRI), number rs37 edited by FitzGerald, John & Malaguzzi Valeri, Laura.
    5. Wurlod, Jules-Daniel & Noailly, Joëlle, 2018. "The impact of green innovation on energy intensity: An empirical analysis for 14 industrial sectors in OECD countries," Energy Economics, Elsevier, vol. 71(C), pages 47-61.
    6. Lutz, Benjamin Johannes & Massier, Philipp & Sommerfeld, Katrin & Löschel, Andreas, 2017. "Drivers of energy efficiency in German manufacturing: A firm-level stochastic frontier analysis," ZEW Discussion Papers 17-068, ZEW - Leibniz Centre for European Economic Research.
    7. Bardazzi, Rossella & Oropallo, Filippo & Pazienza, Maria Grazia, 2015. "Do manufacturing firms react to energy prices? Evidence from Italy," Energy Economics, Elsevier, vol. 49(C), pages 168-181.
    8. repec:eee:enepol:v:109:y:2017:i:c:p:181-190 is not listed on IDEAS
    9. repec:eee:energy:v:170:y:2019:i:c:p:1019-1035 is not listed on IDEAS
    10. repec:eee:streco:v:49:y:2019:i:c:p:340-353 is not listed on IDEAS
    11. repec:eee:appene:v:240:y:2019:i:c:p:499-512 is not listed on IDEAS
    12. repec:eee:eneeco:v:74:y:2018:i:c:p:120-130 is not listed on IDEAS
    13. repec:taf:pocoec:v:28:y:2016:i:4:p:421-435 is not listed on IDEAS

    More about this item

    Keywords

    Input substitution; Manufacturing;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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