Open AccessSubstitution and price elasticity estimates using inter-countrypooled data in a translog cost model
Author(s) -
Joyashree Roy,
Alan H. Sanstad,
Jayant Sathaye,
Raman Khaddaria
Publication year - 2006
Language(s) - English
Resource type - Reports
DOI - 10.2172/918551
Subject(s) - economics , econometrics , elasticity of substitution , substitution (logic) , context (archaeology) , elasticity (physics) , range (aeronautics) , capital (architecture) , microeconomics , production (economics) , engineering , thermodynamics , geography , computer science , physics , archaeology , aerospace engineering , programming language
Pooled data across several developing countries and the U.S. were used to estimate long-run substitution and price elasticities ina translog framework for the paper, iron and steel, and aggregatemanufacturing industries. While the quality of the estimates variesacross the several industry-specific models, the results suggest highervalues for these elasticities than appear commonly used in integratedassessment models. Estimates of own-price elasticities of energy rangefrom - 0.80 to - 1.76 and are comparable to estimates from previouseconometric studies in the context of developed countries (- 0.77 to -0.87). Substitution elasticities show wider variation across countriesand industries. For energy and capital they range from -1.96 to 9.80, forlabor and energy from 2.61 to 7.11, and for energy and material from -0.26 to 2.07