The demand for energy in Canadian manufacturing

Interfuel Substitution and the Industrial Demand for Energy: An International Comparison

“…Griffen and Gregory [34], using pooled international data at four-year intervals, obtain results ver silar to ours. 31 Our estimate is close to that found by Griff`tn and Gregory [34], who also used international data.…”

“…Our approach here is similar to that used recently by Fuss and Waverman [31] in estimating the demand for energy in Canadian manufacturing. We first represent the price of energy (which is the unit cost of energy to a producer choosing fuel inputs) by a homothetic translog cost function with constant returns to scale.…”

“…Applications of the translog cost function can be found in the work of Berndt and Christensen [7], Berndt and Wood [9], Christensen and Greene [34], Fuss and Waverman [31], Fuss [30], Griffen and Gregory [34], Halvorsen [36], and Hudson and Jorgenson [38]. The translog production function has been used by Humphrey and oroney [39] and oroney and Toevs (47,48].…”

“…In either case K might be 3to 5 years. Of course estimation of the parameters in (30) and (31) requires that the cost function (3) be estimated simultaneously with the share equations (4).…”

“…We find this elasticity to be about -0.8, whereas most earlier estimates were around -0.4 to -0.5. Most earlier work, however, was based on data for a single country, so that it is more likely that we have estimated the long-term 31 elasticity. Finally, note from the cross-price elasticities of energy and capital that over the long-run a doubling in the price of energy should result in a 5% increase in the demand for capital and a 6% or 7% increase in the demand for labor as substitution away from energy takes place.…”