F. Yi r Energy Economics 22 2000 285]297 294
5. Price elasticities of factors and factor substitutions
This section presents the price elasticities of factors and factor substitutabilities from the TL and GL models. As the two models disagree in production technology,
we expect different results of price elasticities and factor substitutabilities from them.
5.1. Price elasticities of factors from the TL model From the TL model we obtain the same short- and long-run elasticities of inputs
Ž .
with respect to prices for all the industries see Table 5 , as the model accepts instantaneous adjustments of factors. This unexpected result could either indicate
poor data or poor model in capturing a short-run production. There is one aberration of own-price elasticity; of 36 own-price elasticities, all
are negative as expected except elasticity « for the paper industry.
11
5.2. Price elasticities of factors from the GL model In contrast to the TL model, the GL model has produced quite different short-
and long-run elasticities of factors with respect to prices; the absolute values of short-run own-price elasticities of factors obtained with the GL model are rela-
Ž .
tively smaller than long-runs in all the cases of negative values see Table 6 as expected. Besides, in most of the cases, the absolute values of the short-run
cross-price elasticities of factors are also quite smaller than the long-run counter- parts; this is a major difference in the comparison of the GL and TL models. These
results indicate that the GL model is better suited to describing short-run produc- tion than the TL model, at least for the industries under study.
Ž .
However, one own-price elasticity both short- and long-run for electricity, five for labor and two for capital are positive. Such results are not what we expected.
From this point of view, the GL model is not better for estimating own-price elasticities of factors than the GL model.
5.3. Allen elasticities of substitution Ž .
Ž . Table 7 shows the substitution S or complement C between factors according
to the Allen elasticities of substitution calculated from the two models. The results from the TL model appear first, with GL results after slashes. Looking first at TL
results, electricity is a substitute for fuels in wood, printing, chemicals and non- metallic minerals, but a complement of fuels in the remaining industries. Electric-
ity is a substitute for labor in food, wood, printing, non-metallic minerals and base metals, but a complement of labor in the other industries. There is substitution
between electricity and capital in all industries except wood, implying a general increase in electricity demand in the manufacturing sector as a whole when capital
price goes up. Fuels and labor substitute for each other in all the industries other than wood and machinery, while fuel and capital substitute for each other in food,
F. Yi r Energy Economics 22 2000 285]297 295
Table 6
a
Price elasticities of factors from the GL model Elast.
Food Textiles
Wood Paper
Print. Chem.
N-m min. B. metal
Mach. «
y 0.103
y 0.4287
y 0.032
y 0.046
y 0.013
y 0.299
y 0.488
y 0.098
0.258
11
« 0.002
y 0.038
y 0.036
0.013 0.012
0.136 0.012
y 0.001
y 0.167
12
« y
0.025 y
0.186 y
0.271 y
0.177 0.015
0.005 y
0.462 y
0.176 y
0.679
13
« 0.126
0.653 0.339
0.210 y
0.014 0.157
0.938 0.275
0.588
14
« 0.001
y 0.033
y 0.193
0.208 0.007
1.061 0.002
y 0.001
y 0.075
21
« y
0.038 y
0.034 y
0.089 y
0.108 y
0.064 y
0.133 y
0.028 y
0.137 y
0.127
22
« 0.034
0.201 0.666
0.410 0.058
y 1.816
0.113 0.274
0.232
23
« 0.003
y 0.133
y 0.383
y 0.510
y 0.001,
0.887 y
0.086 y
0.136 y
0.029
24
« y
0.003 y
0.005 y
0.014 y
0.863 0.000
0.001 y
0.019 y
0.188 y
0.031
31
« 0.016
0.007 0.006
0.087 0.002
y 0.031
0.031 0.276
0.022
32
« 0.012
y 0.005
0.009 1.207
y 0.003
0.013 y
0.049 y
0.074 0.029
33
« y
0.025 0.004
y 0.001
y 0.431
0.000 0.018
0.037 y
0.014 y
0.020
34
« 0.040
0.072 0.208
0.092 y
0.029 0.023
0.284 0.128
0.039
41
« 0.004
y 0.017
y 0.043
y 0.012
y 0.003
0.019 y
0.179 y
0.063 y
0.004
42
« y
0.077 0.016
y 0.018
y 0.035
0.028 0.022
0.274 y
0.006 y
0.029
43
« 0.032
y 0.071
y 0.147
y 0.045
0.004 y
0.064 y
0.379 y
0.059 y
0.006
44 U
« y
1.422 y
1.676 y
0.142 y
0.695 y
0.181 y
2.629 y
2.592 y
0.358 0.520
11 U
« 0.032
y 0.150
y 0.161
0.200 0.173
1.243 0.063
y 0.004
y 0.337
12 U
« y
0.338 y
0.728 y
1.209 y
2.709 0.208
0.048 y
2.424 y
0.644 y
1.367
13 U
« 1.728
2.555 1.511
3.204 y
0.200 1.339
4.954 1.006
1.184
14 U
« 0.003
y 0.090
y 0.379
0.604 0.072
3.090 0.010
y 0.002
y 0.343
21 U
« y
0.077 y
0.091 y
0.154 y
0.292 y
0.679 y
0.381 y
0.158 y
0.235 y
0.581
22 U
« 0.060
0.541 1.296
1.168 0.613
y 5.287
0.646 0.469
1.058
23 U
« 0.014
y 0.359
y 0.762
y 1.481
y 0.006
2.578 y
0.499 y
0.233 y
0.134
24 U
« y
0.037 y
0.026 y
0.121 y10.806 0.004
0.006 y
0.105 y
2.101 y
0.024
31
«
U
0.220 0.032
0.055 1.113
0.033 y
0.315 0.167
3.082 0.017
32 U
« 0.164
y 0.026
0.079 15.072
y 0.041
0.141 y
0.272 y
0.824 0.023
33 U
« y
0.347 0.020
y 0.013
y 5.379
0.004 0.167
0.210 y
0.157 y
0.016
34 U
« 0.124
0.101 0.232
1.386 y
0.012 0.214
1.540 0.316
0.072
41 U
« 0.011
y 0.024
y 0.047
y 0.189
y 0.001
0.181 y
0.947 y
0.155 y
0.008
42 U
« y
0.233 0.022
y 0.020
y 0.518
0.011 0.202
1.480 y
0.015 y
0.053
43 U
« 0.097
y 0.100
y 0.165
y 0.678
0.001 y
0.597 y
2.073 y
0.145 y
0.011
44 a
Notes. 1, electricity; 2, fuels; 3, labor; 4, capital;
U
, long-run.
textiles, wood, non-metallic minerals, and machinery. Labor and capital substitute for each other in all industries except base metals.
Ž .
We now look at the GL-model results after slashes in Table 7 . Electricity and fuels substitute each other in food, paper, printing, chemicals, and non-metallic
minerals; electricity and labor substitute only in printing and chemicals; electricity and capital substitute in all the industries except printing; labor and fuels substi-
tute in all the industries except chemicals; fuels and capital substitute in only food and chemical; labor and capital substitute in textiles, printing, chemicals, and
non-metallic minerals.
Ž .
Comparing the results from the two models Table 7 , we find that the models agree in only half of the cases. Both models show substitution between electricity
F. Yi r Energy Economics 22 2000 285]297 296
Table 7
a
Ž . Ž .
The substitutions S or complements C by TLrGL models Factors
Food Textiles
Wood Paper
Print. Chem.
N-m min. B. metal
Mach. Electricity ]fuel
CrS CrC
SrC CrS
SrS SrS
SrS CrC
CrC Electricity ]labor
SrC CrC
SrC CrC
SrS CrS
SrC SrC
CrC Electricity ]capital
SrS SrS
CrS SrS
SrC SrS
SrS SrS
SrS Fuel]labor
SrS SrS
CrS SrS
SrS SrC
SrS SrS
CrS Fuel]capital
SrS SrC
SrC CrC
CrC CrS
SrC CrC
SrC Labor]capital
SrC SrS
SrC SrC
SrS SrS
SrS CrC
SrC
a
Note. A result from the TL model comes first and a result from the GL model comes after the
slash.
and capital and between fuel and labor, or between electricity and fuel, in most of the industries. However, they fail to agree in the substitutabilities between electric-
ity and capital in wood and printing, and between fuel and labor in wood, chemicals, and machinery, or between electricity and fuel in food, wood, and paper.
For electricity ]labor, fuel]capital, and labor]capital these models have produced opposite results in at least four cases. For labor and capital, the TL model suggests
substitutions in all the cases except base metals, whereas the GL model shows substitutions in only textiles, printing, chemicals, and non-metallic minerals. For
textiles, printing, and base metals, the two models match in substitutabilities in almost all the cases, while for wood, they generate opposite results.
6. Conclusions
Kategori