Interfuel and interfactor substitution in Ontario manufacturing, 1962-82

Abstract

The extent of substitutability between energy and the other factors (i.e. labour and capital) is an extremely important question and quite central to energy policy, planning and analysis. This paper addresses this question for the Ontario manufacturing sector. The theoretical model utilized in this analysis is the two–stage translog production frontier. The model was estimated for seven manufacturing sectors using four disaggregated energy inputs and labour and capital. The model was estimated by the FIML technique for the period 1962–82.