@article{article_1615104, title={Substitution between Energy and Capital: Evidence from a Four-Factor Translog Production Function Disentangling Tangible and Intangible Capital}, journal={Ekonomi-tek}, volume={14}, pages={108–131}, year={2025}, author={Akyıldız, Yağmur Tuçe and Berk, İstemi}, keywords={Substitution between energy and capital, tangible and intangible capital, translog production function, panel data, Ridge regression}, abstract={The substitution/complementarity relationship between production factors has received substantial interest in economic literature. Since oil crisis period of 1970s, this stream of literature has particularly focused on the substitutability of energy with other factors of production. This paper assesses the substitution between energy and capital using a four-factor translog production approach separating capital into tangible and intangible forms. Using a panel data set of 14 OECD countries from 1995-2020, we estimated substitution elasticities for 11 manufacturing subsectors using Ridge Regression. Empirical results suggest a substitution between energy and both capital inputs for all manufacturing subsectors. The substitution elasticity between energy and intangible capital is found to be higher than that between energy and tangible capital. Moreover, substitution elasticity between energy and intangible capital is found to be highest in energy-intensive industries while the highest substitution elasticities between energy and tangible capital are recorded in high- and medium-high technology manufacturing subsectors.}, number={1}, publisher={Türkiye Ekonomi Kurumu Vakfı}, organization={This study is not supported by any institution.}