Substitution between Energy and Capital: Evidence from a Four-Factor Translog Production Function Disentangling Tangible and Intangible Capital

Year 2025, Volume: 14 Issue: 1, 108 - 131, 12.03.2025

Yağmur Tuçe Akyıldız , İstemi Berk

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.

Keywords

Substitution between energy and capital, tangible and intangible capital, translog production function, panel data, Ridge regression

Ethical Statement

This study has been prepared in accordance with the rules of scientific research and publication ethics.

Supporting Institution

This study is not supported by any institution.

Enerji ve Sermaye Arasındaki İkame: Maddi ve Maddi Olmayan Sermayenin Ayrıştırıldığı Dört Faktörlü Translog Üretim Fonksiyonundan Bulgular

Abstract

Üretim faktörleri arasındaki ikame/tamamlayıcılık ilişkisi, ekonomik literatürde ilgi gören bir konudur. 1970'lerin petrol krizleri döneminden bu yana, literatür özellikle enerjinin diğer üretim faktörleriyle ikame edilebilirliği üzerine yoğunlaşmıştır. Bu makale, enerjinin sermaye ile ikamesini değerlendirmek için, sermayeyi maddi ve maddi olmayan sermaye olarak ayıran dört faktörlü bir translog üretim yaklaşımı kullanmaktadır. 14 OECD ülkesine ait, 1995-2020 dönemini kapsayan panel veri seti kullanılarak, Ridge Regresyon yöntemiyle 11 imalat sanayii alt sektörü için ikame esneklikleri tahmin edilmiştir. Ampirik sonuçlar, tüm imalat sanayii alt sektörlerinde enerji ile her iki sermaye girdisi arasında ikame ilişkisinin bulunduğunu göstermektedir. Enerji ile maddi olmayan sermaye arasındaki ikame esnekliğinin, enerji ile maddi sermaye arasındaki ikame esnekliğinden daha yüksek olduğu bulunmuştur. Ayrıca, enerji ile maddi olmayan sermaye arasındaki ikame esnekliği enerji yoğun sektörlerde en yüksek seviyede bulunurken, enerji ile maddi sermaye arasındaki en yüksek ikame esneklikleri yüksek ve orta-yüksek teknoloji imalat sanayii alt sektörlerinde kaydedilmiştir.

Keywords

Enerji ve sermaye arasındaki ikame, maddi ve maddi olmayan sermaye, translog üretim fonksiyonu, panel veri, Ridge regresyonu

Ethical Statement

Bu çalışma bilimsel araştırma ve yayın etiği kurallarına uygun olarak hazırlanmıştır

Supporting Institution

Bu araştırma herhangi bir kurum tarafından desteklenmemiştir.

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