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Energy and the non-energy inputs substitution: evidence for Italy, Portugal and Spain

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  • Medina, J.
  • Vega-Cervera, J. A.

Abstract

The factor demand is modeled for Italy, Portugal and Spain. We estimated a translog cost function with capital, labor and energy over the 1980-1996 period. Our objective regarding energy as input was two-fold: on the one hand, to verify its incorporation as a productive factor, and, on the other, to observe its degree of substitutability with the other classical factors, given the high level of energy dependency of these countries. Using a separability test and confidence intervals for the Allen and price elasticities, our estimates confirmed both the non-separability of the energy input and the existence of consistent substitution between energy and labor only for Italy.

Suggested Citation

  • Medina, J. & Vega-Cervera, J. A., 2001. "Energy and the non-energy inputs substitution: evidence for Italy, Portugal and Spain," Applied Energy, Elsevier, vol. 68(2), pages 203-214, February.
    • Handle: RePEc:eee:appene:v:68:y:2001:i:2:p:203-214
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Koetse, Mark J. & de Groot, Henri L.F. & Florax, Raymond J.G.M., 2008. "Capital-energy substitution and shifts in factor demand: A meta-analysis," Energy Economics, Elsevier, vol. 30(5), pages 2236-2251, September.
    3. Zha, Donglan & Zhou, Dequn, 2014. "The elasticity of substitution and the way of nesting CES production function with emphasis on energy input," Applied Energy, Elsevier, vol. 130(C), pages 793-798.
    4. Kim, Jihyo & Heo, Eunnyeong, 2013. "Asymmetric substitutability between energy and capital: Evidence from the manufacturing sectors in 10 OECD countries," Energy Economics, Elsevier, vol. 40(C), pages 81-89.
    5. Llop, Maria, 2020. "Energy import costs in a flexible input-output price model," Resource and Energy Economics, Elsevier, vol. 59(C).
    6. Lagomarsino, Elena, 2020. "Estimating elasticities of substitution with nested CES production functions: Where do we stand?," Energy Economics, Elsevier, vol. 88(C).
    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. Bölük, Gülden & Koç, A. Ali, 2010. "Electricity demand of manufacturing sector in Turkey: A translog cost approach," Energy Economics, Elsevier, vol. 32(3), pages 609-615, May.

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