Effects of technical and allocative inefficiencies on energy and nonenergy elasticities: an analysis of energy-intensive industries in China

Donglan Zha*, Anil Savio Kavuri

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    11 Citations (Scopus)

    Abstract

    Elasticity of substitution is traditionally estimated while ignoring technical and allocative inefficiencies, which could bias the estimates. We estimate elasticity of substitution for Chinese energy-intensive sectors by incorporating these inefficiencies. The results show most of the sectors are low substitutes between input factors and stress important differences among energy-intensive sectors. Concerning the cross-price elasticity for energy, with respect to capital (labor), the sectors are mainly characterized by weak substitutability or complementary. These imply the production structure is quite rigid and capital cannot be so readily used as a substitute for energy.

    Original languageEnglish
    Pages (from-to)292-297
    Number of pages6
    JournalChinese Journal of Population Resources and Environment
    Volume14
    Issue number4
    DOIs
    Publication statusPublished - 1 Oct 2016

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