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Is it Time for a Revival of ETR in Italy? Energy Elasticities and Factor Substitutability for Manufacturing Firms

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  • Rossella Bardazzi

    (University of Florence)

  • Filippo Oropallo

    (Istat, Rome)

  • M. Grazia Pazienza

    (University of Florence)

Abstract

Environmental Tax Reforms (ETRs) have recently enjoyed renewed widespread attention as a tool aimed at GHG emission abatement. In this paper the efficacy of energy-related taxes in relation to Italian firms’ behaviour is analyzed. A translog model is used to estimate factor demands for a panel of industrial firms divided between small-medium and large enterprises. Our analysis estimates large and negative own price elasticities for energy. As for other inputs, we find complementarity between energy and capital and substitutability between energy and labour for small firms therefore a double dividend effect could take place if ETR is implemented.

Suggested Citation

  • Rossella Bardazzi & Filippo Oropallo & M. Grazia Pazienza, 2009. "Is it Time for a Revival of ETR in Italy? Energy Elasticities and Factor Substitutability for Manufacturing Firms," Rivista di Politica Economica, SIPI Spa, vol. 99(3), pages 211-246, JULY-SEPT.
    • Handle: RePEc:rpo:ripoec:v:99:y:2009:i:3:p:211-246
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    Cited by:

    1. 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.

    More about this item

    Keywords

    environmental tax reform; energy factor demand; micropanel data; translog;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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