Substitution between Energy and Capital: Evidence from a Four-Factor Translog Production Function Disentangling Tangible and Intangible Capital
Öz
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.
Anahtar Kelimeler
Substitution between energy and capital, tangible and intangible capital, translog production function, panel data, Ridge regression
Destekleyen Kurum
Bu araştırma herhangi bir kurum tarafından desteklenmemiştir.
Etik Beyan
Bu çalışma bilimsel araştırma ve yayın etiği kurallarına uygun olarak hazırlanmıştır
Kaynakça
- Arnberg, S., & Bjørner, T. B. (2007). Substitution between Energy, Capital and Labour within Industrial Companies: A Micro Panel Data Analysis. Resource and Energy Economics, 29(2), 122–136. https://doi.org/10.1016/j.reseneeco.2006.01.001
- Arrow, K. J., Chenery, H. B., Minhas, B. S., & Solow, R. M. (1961). Capital-Labor Substitution and Economic Efficiency. The Review of Economics and Statistics, 43(3), 225–250. https://doi.org/10.2307/1927286
- Bardazzi, R., Oropallo, F., & Pazienza, M. G. (2015). Do Manufacturing Firms React to Energy Prices? Evidence from Italy. Energy Economics, 49, 168-181.
- Başeğmez, H. (2022). Gelişmekte olan ülkelerde ekonomik büyüme: CES ve translog üretim fonksiyonu yaklaşımı. Dicle Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 12(24), 432-451.
- Behrman, J. R. (1972). Sectoral elasticities of substitution between capital and labor in a developing economy: times series analysis in the case of postwar Chile. Econometrica: Journal of the Econometric Society, 311-326.
- Bell, F. W. (1964). The Role of Capital-Labor Substitution in the Economic Adjustment of an Industry Across Regions. Southern Economic Journal, 123-131.
- Berndt, E. R., & Wood, D. O. (1975). Technology, Prices, and the Derived Demand for Energy. The Review of Economics and Statistics, 57(3), 259. https://doi.org/10.2307/1923910
- Christensen, L. R., Jorgenson, D. W., & Lau, L. J. (1973). Transcendental Logarithmic Production Frontiers. The Review of Economics and Statistics, 55(1), 28–45.
- Corsatea, T. D., Lindner, S., Arto, I., Román, M. V., Rueda-Cantuche, J. M., Velázquez Afonso, A., Amores, A. F., & Neuwahl, F. (2019). World Input-Output Database Environmental Accounts: Update 2000-2016 (EUR 29727 EN). Publications Office of the European Union. https://doi.org/10.2760/024036
- Dahl, C., & Erdogan, M. (2000). Energy and interfactor substitution in Turkey. Opec Review, 24(1), 1-22.