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Energy Intensity and Long- and Short-Term Efficiency in US Manufacturing Industry

Author

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  • Oleg Badunenko

    (Department of Economics and Finance, College of Business, Arts and Social Sciences, Brunel University London, Uxbridge UB8 3PH, UK
    These authors contributed equally to this work.)

  • Subal C. Kumbhakar

    (Department of Economics, State University of New York at Binghamton, Binghamton, NY 13902-6000, USA
    Department of Innovation, Management and Marketing, University of Stavanger Business School, University of Stavanger, N-4036 Stavanger, Norway
    These authors contributed equally to this work.)

Abstract

We analyze energy use efficiency of manufacturing industries in US manufacturing over five decades from 1960 to 2011. We apply a 4-component stochastic frontier model, which allows disentangling efficiency into a short- and long-term efficiency as well as accounting for industry heterogeneity. The data come from NBER-CES Manufacturing Industry Database. We find that relative to decade-specific frontiers, the overall efficiency of manufacturing industries, which is a product of transient and persistent efficiencies has deteriorated greatly in the 1970s and rebounded only in the 2000s. The industries are very efficient in the short-term and this has not changed over five decades. The high level of overall inefficiency is almost completely due to the structural inefficiency which can be explained by what is referred to as the “energy paradox”. Finally, higher energy-intensive industries perform worse in terms of energy use efficiency than their low energy-intensity counterparts.

Suggested Citation

  • Oleg Badunenko & Subal C. Kumbhakar, 2020. "Energy Intensity and Long- and Short-Term Efficiency in US Manufacturing Industry," Energies, MDPI, vol. 13(15), pages 1-21, August.
    • Handle: RePEc:gam:jeners:v:13:y:2020:i:15:p:3954-:d:393278
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    3. Badunenko, Oleg & Galeotti, Marzio & Hunt, Lester C., 2023. "Better to grow or better to improve? Measuring environmental efficiency in OECD countries with a stochastic environmental Kuznets frontier (SEKF)," Energy Economics, Elsevier, vol. 121(C).

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