corporate taxation and capital accumulation evidence from sectoral panel data for 14 oecd countries abstract we present new empirical evidence that sector level capital output ratios are strongly influenced by corporate tax incentives as summarised by the tax component of a standard user cost of capital measure we use sectoral panel data for the usa japan australia and eleven eu countries over the period 1982 2007 our panel combines internationally consistent data on capital stocks value added and relative prices from the eu klems database with corporate tax measures from the oxford university centre for business taxation our results for equipment investment are particularly robust and strikingly consistent with the basic economic theory of corporate investment

energy substitution when model selection depends on the focus abstract in contrast to conventional model selection criteria the focused information criterion fic allows for the purpose specific choice of model specifications this accommodates the idea that one kind of model might be highly appropriate for inferences on a particular focus parameter but not for another ever since its development the fic has been increasingly applied in the realm of statistics but this concept appears to be virtually unknown in the literature on energy and production economics using the classical example of the translog cost function and production data for 35 u s industry sectors 1960 2005 this paper provides for an empirical illustration of the fic and demonstrates its usefulness in selecting production models thereby focusing on the ease of substitution between energy and capital versus energy and labor

estimating elasticities of substitution with nested ces production functions where do we stand abstract prompt by an increasing interest by climate change modelers a rich literature estimating elasticities of substitution in a nested ces production framework has recently developed this article reviews such literature we critically describe the nesting structures estimation approaches data sources and aggregation econometric techniques and types of substitution elasticities used by previous literature to offer a comprehensive description of the various options available to a researcher attempting this estimation we also provide suggestions for potential improvements to the estimation process in particular we warn researchers to use ces production functions with caution in empirical applications given their restrictive build in assumptions

are corporate tax rates or countries converging abstract the statutory rate and effective tax rate imposed on corporation income as well as the dispersion of these rates began to decline in the 1980s is this due to changes in the domestic determinants of corporate taxation or increases in international pressures for tax competition this paper finds clear evidence that the corporate tax rate is insulated from a country s revenue needs across countries there is no association of the expenditure gdp ratio with the corporate statutory rate and only weak evidence of a positive association with the average rate there is suggestive but not definitive evidence that the domestic role of the corporate tax as a backstop to the individual income tax is important across countries there is indeed a strong association between the top individual rate and the top statutory corporate rate there is intriguing evidence about the role of international competitive pressures on corporate taxation measures of openness are negatively associated with statutory corporate rates although not with revenues collected as a fraction of gdp strikingly larger more trade intensive countries do collect more corporate tax but this may be because these countries are more attractive venues for investment

structural change in factor substitution in finnish manufacturing the possibility of structural change in finnish factor substitution relations between energy and nonenergy factors is analyzed the standard generalized leontief klemf cost function is modified so that the substitution parameters related to electricity and fuel factors may shift to new levels over time the initial point of transition is 1974 during which the first energy crises took place likelihood ratio tests confirm that there has indeed been a statistically significant change in energy versus nonenergy substitution our estimates imply stronger substitutability for most input pairs after the energy crisis

dynamics and determinants of energy intensity in the service sector a cross country analysis 1980 2005 we present a detailed analysis of energy intensity developments across 23 service sectors in 18 oecd countries over the period 1980 2005 we find that the shift towards a service economy has contributed to lower overall energy intensity levels in the oecd but this contribution would have been considerably larger if the service sector had realized the same degree of energy efficiency improvements as the manufacturing sector in most oecd countries energy intensity levels in services tend to decrease relatively slow especially after 1995 if we control this trend for the impact of structural changes within the services sector by means of a decomposition analysis we find that in about one third of the oecd countries energy intensity levels in services have increased over time the impact of structural changes on aggregate energy intensity dynamics in services has increased considerably after 1995 highlighting a relatively poor energy efficiency performance within a wide range of service sectors we show that the introduction of information and communication technology ict plays a potentially important role here using panel data regression analysis we find a limited role for energy prices in explaining variation in energy productivity while climate conditions clearly impact energy productivity

the induced innovation hypothesis and energy saving technological change we develop a methodology for testing hicks s induced innovation hypothesis by estimating a product characteristics model of energy using consumer durables augmenting the hypothesis to allow for the ine uence of government regulations for the products we explored the evidence suggests that i the rate of overall innovation was independent of energy prices and regulations ii the direction of innovation was responsive to energy price changes for some products but not for others iii energy price changes induced changes in the subset of technically feasible models that were offered for sale iv this responsiveness increased substantially during the period after energy efficiency product labeling was required and v nonetheless a sizable portion of efficiency improvements were autonomous

price sensitivity of energy demand in norwegian industries the production side of the latest version of the norwegian msg model has been developed to allow for substitution between various energy goods and between energy and other inputs the production structure and behavior are specified for 19 sectors of the model within the framework of neoclassical production theory formalized by generalized leontief cost functions the main elements of the production model are presented along with the empirical results from estimation of the derived demand relations the analysis focuses on the price sensitivity of energy demand as measured by different types of price elasticities

the determinants of aggregate energy use in west germany factor substitution technological change and trade this paper examines the determinants of production related energy use in west germany over the period 1976 1994 the approach is to estimate a system of share equations for energy capital low skilled labor high skilled labor and materials in the west german production sector taking account of biased technological change and increasing trade orientation while technological change is found to be energy saving increased openness is energy using i e tends to increase the energy share factor substitution biased technological change and trade contribute to the year to year volatility of energy intensity in the proportion 66 30 4 the results are robust across several specifications examined

corporate taxation in the oecd in a wider context against the background of increased globalisation statutory corporate tax rates have shown a clear downward trend over the last two decades the sharp decline in these rates was accompanied by substantial tax base broadening and a comparable reduction in personal income tax rates only until the early 1990s this suggests that corporate tax competition is of increasing importance so far corporate tax revenues remain fairly stable but an analysis of corporate taxation in the context of the overall tax systems shows that a substantial shift towards value added taxes has taken place while the trends so far have been driven by smaller european countries recent tax reforms indicate that increasing tax competition is inducing a shift towards consumption even for larger economies

a theory of interregional tax competition a general equilibrium model is constructed to study tax competition where local governments compete for capital by holding down property tax rates and public expenditure levels an exact definition of tax competition is provided and both the existence and nonexistence of tax competition are shown to be theoretically possible it is argued however that tax competition must occur under empirically reasonable conditions inefficiency in public production is also explicitly modeled the amount of capital used to produce a given level of public service output is shown to be greater than that which is required to minimize costs evaluated at the prices facing private firms

the empirical assessment of technology differences comparing the comparable this paper compares technologies across space and time on the basis of factual and counterfactual substitution elasticities and argues that differences in estimated substitution elasticities should be decomposed into two counterfactual components while the first component is designed to indicate how the ease of substitution is altered by varied economic circumstances the second addresses the question of how technologies would compare under genuinely comparable situations this argument is illustrated by the example of energy price elasticities of capital before and after the oil crisis of the early 1970s

assessing energy price induced improvements in efficiency of capital in oecd manufacturing industries to assess how capital stocks adapt to energy price changes it is necessary to account for the impacts on different vintages of capital and to account separately for price induced and autonomous improvements in the energy efficiency of capital stock the results of econometric analysis for five manufacturing industries in 19 oecd countries between 1990 and 2005 indicate that higher energy prices resulted in smaller energy use due to both improved energy efficiency of capital stock and reduced demand for the energy input the investment response to energy prices varied considerably across manufacturing industries being more significant in energy intensive sectors the results of policy simulations indicate that a carbon tax can deliver significant reductions in energy consumption in the medium run with modest declines in energy using capital stock

the role of energy in real business cycle models abstract this paper modifies hansen s 1985 analysis of a real business cycle mode with indivisible labor by explicitly including energy as a productive input and modelling the relative price of energy as an exogenous random process one goal is to determine the extent to which the introduction of energy price shocks reduces the reliance of the real business cycle model on unobserved technology shocks the other goal following christiano and eichenbaum 1991 is to compare the correlation between real wages and hours predicted by the energy inclusive model to that predicted by hansen s model

how does globalization affect the implicit tax rates on labor income capital income and consumption in the european union this article analyzes the effects of globalization on implicit tax rates itrs on labor income capital income and consumption in the eu15 and central and eastern european new member states cee nms we find supportive evidence for an increase in the itr on labor income in the eu15 but no effect on the itr on capital income there is evidence of convergence in terms of the itr on consumption as countries with higher than average itr on consumption respond to globalization by decreasing their tax rates there are important differences among the welfare regimes within the eu15 social democratic countries have decreased the tax burden on capital but increased that on labor due to globalization globalization exerts a pressure to increase taxes on labor income in the conservative and liberal regimes as well taxes on consumption decrease in response to globalization in the conservative and social democratic regimes in the cee nms there is no effect of globalization on the itr on labor and capital income but we find a negative impact on the itr on consumption in the cee nms with higher than average itr on consumption jel h23 h24 h25 f19 f21

opec s production under fluctuating oil prices further test of the target revenue theory abstract oil production cutbacks in recent years by opec members to stabilize price and to increase revenues warrant further empirical verification of the target revenue theory trt we estimate a modified version of griffin 1985 target revenue model using data from 1973 to 2000 the sample period unlike previous investigations includes phases of both price increase 1970s and price decrease 1980s 1990s thus providing a better framework for examining production behavior the results like the earlier study are not supportive of the strict version of the trt however evidence negative and significant elasticity of supply of the partial version are substantiated further empirical estimates do not support the competitive pricing model hypothesizing a positive elasticity of supply opec s loss of market share and the drop in the share of oil based energy should signal an adjustment in pricing and production strategies

the energy rebound effect in china s light industry a translog cost function approach abstract china is in its industrialization and urbanization development stage which requires strong energy support with the largest population in the world the energy endowment of china is relatively small therefore energy conservation is one of the key tools for china s sustainable development and energy security when making policies for conservation the chinese government needs to deal with rebound effect carefully in 2012 china s light industry consumed 316 million tons of coal equivalents accounting for 9 percent of the country s total energy consumption which is about the total amount of energy consumed by south korea based on the translog cost function the magnitude of rebound effect in china s light industry is estimated for the first time using the dynamic ordinary least squares and seemingly unrelated regression methods considering the asymmetric effects of energy prices on energy consumption the rebound effect is approximately 37 7 and all the inputs are substitutes except for labor and energy the different magnitude of rebound effect between light and heavy industry is discussed and some policy implications are provided for more effective energy conservation allowing for the rebound effect

energy crises and change of technology a production model is formulated for the finnish metal product and machinery industry for studying energy crises related structural changes two models are estimated a partial static equilibrium model where capital is treated as a fixed input in the short run and a dynamic model where adjustment costs of the capital input are taken into account alternative hypotheses of structural change are formulated as gradual parameter shifts the results show that some of the energy related parameters have changed over time also the contributions of parameter changes and variations in the average values of the variables on the changes in the energy demand elasticities are studied the most important effect is the strengthening of the energy saving bias in technical change

measuring innovative performance is there an advantage in using multiple indicators abstract the innovative performance of companies has been studied quite extensively and for a long period of time however the results of many studies have not yet led to a generally accepted indicator of innovative performance or a common set of indicators so far the variety in terms of constructs measurements samples industries and countries has been substantial this paper studies the innovative performance of a large international sample of nearly 1200 companies in four high tech industries using a variety of indicators these indicators range from r d inputs patent counts and patent citations to new product announcements the study establishes that a composite construct based on these four indicators clearly catches a latent variable innovative performance however our findings also suggest that the statistical overlap between these indicators is that strong that future research might also consider using any of these indicators to measure the innovative performance of companies in high tech industries

tax competition when firms choose their organizational form should tax loopholes for multinationals be closed we analyze a sequential game between two symmetric countries when firms can invest in a multinational structure that confers tax savings governments are able to commit to long run tax discrimination policies before firms decisions are made and before statutory capital tax rates are chosen non cooperatively whether a coordinated reduction in the tax preferences granted to mobile firms is beneficial or harmful for the competing countries depends critically on the elasticity with which the firms organizational structure responds to tax discrimination incentives a model extension with countries of different size shows that small countries are likely to grant more tax preferences than larger ones along with having lower effective tax rates

corporate tax effects on the quality and quantity of fdi this paper measures the relative importance of quality and quantity effects of corporate taxation on foreign direct investment quantity is affected if corporate taxes reduce the equilibrium stock of foreign capital in a given country quality effects arise if taxes decrease the extent to which investment contributes to the corporate tax base and the capital intensity of production depending on the sign of the quality effects the detrimental welfare effects of corporate taxation are either mitigated or aggravated we derive a number of hypotheses how corporate tax changes may affect the quality of investment our hypotheses are then tested using data from a large sample of european multinationals with regard to corporate tax effects on the corporate tax base we find that quality effects account for up to fourty per cent of the total effect with regard to corporate tax effects on labour income our results suggest that quality effects mitigate the negative quantity effect by nearly sixty percent as corporate taxes strongly increase the labor intensity of production an important implication is that governments should not exclusively care about the size of inbound fdi flows but also about their specific characteristics i e their quality

the recent slowdown of productivity growth the slowdown of productivity growth in the developed countries during the seventies will in this paper be viewed as a combined effect of three closely interacting forces i a long term deterioration in the efficiency and flexibility of some basic mechanisms of the economic and political systems of these countries ii the fading away of a number of uniquely favourable circumstances for productivity growth during the fifties and sixties and iii the exposure of these economies to unusually severe macroeconomic disturbances in the seventies careful inspection of time series with attempted modifications for cyclical factors suggests that there was hardly any general slowdown of productivity growth among developed countries before approximately i972 4 1 as we know the situation is radically different since then labour productivity growth per year for the entire national economy gdp per man hour seems to have fallen between the periods i960 73 and i973 9 by about i 2 percentage points in the united states 45 by about 24 percentage points in western europe2 45 and by about 5 9 percentage points in japan 6o table i see also fig i the slowdown was of about the same size in the business and manufacturing sectors see table i to calculate the extent of the slowdown of total factor productivity growth is of course a much more hazardous matter to which i will return later if just the various system changes and the fading away of the uniquely favourable factors had been the dominating forces behind the productivity growth slowdown we would expect the slowdown to have been gradual rather than abrupt as it turned out to be this abruptness as well as its timing makes the dramatic macroeconomic disturbances around i972 4 a prime suspect when looking for the villain behind the productivity growth slowdown indeed it is a basic hypothesis of the paper that these macroeconomic disturbances were not only by themselves strongly unfavourable for productivity growth but that they also revealed and accentuated the gradual deterioration of the

does trade liberalization trigger tax competition theory and evidence from oecd countries this article aims at assessing the empirical relevance of new economic geography models of tax competition we rely on a simple model to specify tax reactions functions which we estimate with a panel covering up to 26 oecd countries over the period 1982 to 2006 we provide striking support for the two main predictions regarding the slope and the constant of the reaction function national governments seem to adjust their corporate tax rate towards the level chosen in countries that are more populated and they tend to set higher corporate tax rates when their country enjoys a high real market potential through the latter effect trade integration exerts a positive influence on the level of corporate taxation however using a theoretically grounded index of bilateral trade integration we also show that trade liberalization gives rise to significant tax interactions in the setting of effective average tax rates in the case of european countries thus exerting a downward pressure on corporate tax rates

energy prices and productivity growth the sharp decline in economic growth since 1973 presents a problem comparable in scientific interest and social importance to the problem of unemployment in the great depression of the 1930s conventional methods of economic analysis have been tried and have been found to be inadequate this paper outlines a new framework for understanding the slowdown in economic growth we find that the fall in u s economic growth since 1973 has been due to the dramatic decline in productivity growth within the new framework we identify higher energy prices as an important determinant of the productivity slowdown

business taxation in a globalized world this paper addresses broad issues concerning taxes on company profit in a globalized world in which companies capital and profit can move easily between countries it considers reasons for national taxation of company profit in such a world and reviews the development of such taxes in the oecd the role played by tax havens is discussed and evidence on the responsiveness of companies to differences in taxation across countries is presented a central issue is the allocation of taxable profit between countries existing practice has no clear rationale recent proposals for fundamental reform in the eu are discussed

can market oriented economic reforms contribute to energy efficiency improvement evidence from china since china accelerated its market oriented economic reforms at the end of 1992 its energy intensity has declined 3 6 annually over 1993 2005 however its energy intensity declined 4 2 annually during its first reform period 1979 1992 therefore can we conclude that the accelerated marketization since the end of 1992 has made no contribution to its energy efficiency improvement in order to answer this challenging question we examine the changes of energy own price elasticity as well as the elasticities of substitution between energy and non energy capital and labor in china during the periods of 1979 1992 and 1993 2003 generally in transition or developing economies holding the technology and output level fixed if the energy own price elasticity algebraic value declines or the substitution elasticity between factors rises they will contribute to energy efficiency improvement our empirical study finds that 1 during 1979 1992 the energy own price elasticity is positive 0 285 and capital energy labor energy are both morishima complementary which indicates a distorted energy price and inefficient allocation and 2 during 1993 2003 the own price elasticity for energy is negative 1 236 and capital energy and labor energy are both morishima substitute all factor demands become more elastic and all elasticities of substitution increase the implication is that the accelerated marketization contributes substantially to energy efficiency improvement since 1993 c 2006 elsevier ltd all rights reserved

china s energy economy technical change factor demand and interfactor interfuel substitution with its rapid economic growth china s primary energy consumption has exceeded domestic energy production since 1994 leading to a substantial expansion in energy imports particularly of oil china s energy demand has an increasingly significant impact on global energy markets in this paper allen partial elasticities of factor and energy substitution and price elasticities of energy demand are calculated for china using a two stage translog cost function approach the results suggest that energy is substitutable with both capital and labor coal is significantly substitutable with electricity and complementary with diesel while gasoline and electricity are substitutable with diesel china s energy intensity is increasing during the study period 1995 2004 and the major driver appears to be due to the increased use of energyintensive technology

rejecting capital skill complementarity at all costs any serious empirical study of factor substitutability has to allow the data to display complementarity as well as substitutability the standard approach reflecting this idea is a translog specification this is also the approach used by numerous studies analyzing the relative capital skill complementarity hypothesis formulated by griliches 1969 according to this hypothesis the degree of substitutability between skilled labor and capital is lower than that for unskilled labor and capital yet the results of empirical studies investigating this hypothesis are controversial this paper offers a straightforward explanation using a translog approach reduces the issue of actor substitutability or complementarity to a question of cost shares our review of translog studies mentioned in hamermesh s 1993 summary on the demand for heterogeneous labor demonstrates that this argument is empirically relevant all these studies can be reconciled with each other on the basis of the cost share argument

the relation between energy and non energy inputs in india s manufacturing industries the purpose of this paper is to examine the substitution possibilities among energy inputs and other non energy factors of production in response to price changes we relate this study to india s manufacturing industries this is of special interest since in the recent years indian industries have been gradually moving towards a high energy intensive structure of production in 1970 71 the mining and the manufacturing sector accounted for 52 9 per cent of the total commercial energy consumed in india in coal equivalent terms 8 p 1301 in this study we compute cross and own price elasticities of demand for all inputs a knowledge of the substitution possibilities is of paramount importance in economic planning consider for instance three situations first the effect of rising energy prices will tend to raise the demand for capital if capital and energy are substitute inputs second if energy and capital are complements the higher price for energy will tend to reduce the demand for both new capital equipment and energy thus the availability of cheap and ample supply of energy is significant in determining capital intensity and the future rates of capital formation in the literature on economic development this aspect of the choice of techniques has been by and large neglected third if there are limited substitution possibilities between energy and other inputs the adjustment by industry to higher prices of energy may be quite difficult and costs of production may rise precipitously necessitating a drastic change away from energy based production techniques in section ii of this paper we discuss the technique of analysis and describe the sources of data section iii presents the results and section iv is confined to the concluding remarks

the demand for capital labor and energy in european manufacturing industry before and after the oil price shocks the price and substitution elasticities for factor inputs capital labor fuels and electricity are estimated for total manufacturing industry on the basis of a pooled crosscountry time series analysis for nine west european countries the impact of the economic disturbances in the 1970s on the price sensitivity of demand is analyzed by estimating a translog cost function for two separate periods 1960 72 and 1973 80 hicks neutral technical change is rejected for both periods the results indicate some quite significant changes in the elasticities over the two periods

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

factor substitution in u s manufacturing does plant size matter we use micro data for 10 412 u s manufacturing plants to estimate the degrees of factor substitution by industry and by plant size we find that 1 capital labor energy and materials are substitutes in production and 2 the degrees of substitution among inputs are quite similar across plant sizes in a majority of industries two important implications of these findings are that 1 small plants are typically as flexible as large plants in factor substitution consequently economic policies such energy conservation policies that result in rising energy prices would not cause negative effects on either large or small u s manufacturing plants and 2 since energy and capital are found to be substitutes the 1973 energy crisis is unlikely to be a significant factor contributing to the post 1973 productivity slowdown

cross border tax effects on affiliate investment evidence from european multinationals recent studies suggest that multinational firm activities at home and abroad are positively correlated which may be due to the use of common inputs like marketing patents etc then a cost shock at one location may lead to reduced activity in all other locations within the firm in this paper we theoretically and empirically analyze national corporate tax policy in such a setting our main hypothesis is that corporate taxation at the parent location not only reduces the parent s capital stock but also lowers capital stocks at affiliates abroad using micro data on european multinational firms we confirm the hypothesis showing that a 10 percentage point increase in corporate tax rates is associated with a 5 6 decrease in the affiliate s capital stock from a welfare point of view this cross border tax effect on the capital stock gives rise to a negative fiscal externality of corporate taxation which is empirically shown to compensate a substantial fraction of the well known positive externality due to profit shifting

factor substitution and economies of scale and utilisation in kuwait s crude oil industry abstract the cost structure of the crude oil industry in kuwait has been examined with specific focus on factor substitution and economies of scale and utilisation this has been done by estimating translog cost functions both long run and short run using time series data covering the period from 1976 to 1996 the results indicate that the implied production structure is non homothetic and the pattern of scale effect is labour saving but capital and material using the evidence also supports the presence of an induced exogenous technical change which is non neutral labour and capital using and material saving the elasticity of substitution between capital and labour is positive implying that the two inputs are substitute the results also indicate the existence of diseconomies of scale in the production of crude oil but no economies or diseconomies of utilisation

energy intensity developments in 40 major economies structural change or technology improvement this study analyzes energy intensity trends and drivers in 40 major economies using the wiod database a novel harmonized and consistent dataset of input output table time series accompanied by environmental satellite data we use logarithmic mean divisia index decomposition to 1 study trends in global energy intensity between 1995 and 2007 2 attribute efficiency changes to either changes in technology or changes in the structure of the economy and 3 highlight sectoral and regional differences we first show that heterogeneity within each sector across countries is high these general trends within the sectors are dominated by large economies first and foremost the united states in most cases heterogeneity is lower within each country across the different sectors regarding changes of energy intensity at the country level improvements between 1995 and 2007 are largely attributable to technological change while structural change is less important in most countries notable exceptions are japan the united states australia taiwan mexico and brazil where a change in the industry mix was the main driver behind the observed energy intensity reduction

on the measurement of investment types heterogeneity in corporate tax elasticities this paper contributes to debates about the appropriate characterisation of heterogeneous investment types and to what extent different investment motives affect the responsiveness to corporate taxation in particular we employ and refine a methodology to better evaluate the tax elasticity of investment types using a combination of both firm specific information and sector specific information from input output tables we discuss how to classify investment as non related horizontal vertical and complex types first we point out to what extent the resulting classification depends on assumptions made by the researcher second we employ an ample set of classifications and find that non related investment reacts stronger to corporate taxation whereas horizontal investment is less responsive though significant negative tax semi elasticities turn out for the subset of manufacturing industries to address inherent characteristics of vertical and complex investment we extend the methodology and find that by and large stronger business motives reduce the tax responsiveness of investment to a larger extent given the current debates about substantial corporate tax reforms it is all the more important to recognise that corporate tax effects can vary fundamentally between countries driven by country specific differences in their composition of industries and investment types

the energy demand in the manufacturing sector of pakistan some further results abstract the purpose of this study was to re examine the role of energy in the manufacturing sector of pakistan using a partial equilibrium approach gl restricted cost function along with the factor demand equations were estimated using zellner s iterative procedure higher energy prices do not seem to adversely affect investment in capital substitution possibilities between energy and non energy inputs are very limited and therefore energy price hikes may directly affect the cost of production inter fuel cross price elasticities indicate that there are substitution possibilities between electricity and gas

the real time price elasticity of electricity the real time price elasticity of electricity contains important information on the demand response of consumers to the volatility of peak prices despite the importance empirical estimates of the real time elasticity are hardly available this paper provides a quantification of the real time relationship between total peak demand and spot market prices we find a low value for the real time price elasticity which may partly be explained from the fact that not all users observe the spot market price if we correct for this phenomenon we find the elasticity to be fairly low for consumers currently active in the spot market if this conclusion applies to all users this would imply a limited scope for government intervention in supply security issues

corporate tax elasticities a reader s guide to empirical findings corporate taxes exert a variety of effects on business behaviour a wealth of empirical evidence assesses the magnitude of these behavioural margins of taxation this article offers an up to date review and aims to provide common ground by computing for each distortion the semi elasticity of the corporate tax base we pay particular attention to international investment where it is not a priory clear whether marginal investment decisions or discrete locations are most important using anextension of the meta analysis of de mooij and ederveen 2003 we explore the extent to which existing studies reveal differences in effect size between the intensive and extensive margins of international investment

energy taxation reasons for discriminating in favor of the production sector abstract if a small open economy wishes to restrict it s greenhouse gas emissions it has to decide whether to impose uniform taxes on all polluters or to resort to a discriminatory policy in practice countries tend to impose higher taxes on households and to tax the industrial sector more leniently this paper identifies conditions under which this is efficient it is shown that an efficiency maximizing tax planner discriminates in favor of the production sector if i there are restrictions on the taxation of lump sum income or if ii labor supply exerts market power

flexible consumer demand functions and linear estimation comment in a recent article in this journal swamy and binswanger sb claim that consumer demand equations in real income and relative prices can be obtained directly by differentiating a cost function in which output is replaced by real income the advantage of this approach they maintain is that we can obtain observable demand functions linear in parameters which are integrable into wellbehaved expenditure and indirect utility functions this approach to deriving demand functions however is considerably less general than sb maintain their method of derivation assumes that changes in utility can be approximated by changes in real income changes in utility are proportional to changes in real income for any given price vector but this proportionality factor will change when prices change unless indifference curves are everywhere parallel this latter condition obtains only when the direct utility function is homothetic implying unitary income elasticities throughout this means as a description of the real world sb s method can have only local validity not global validity like roy s identity this also means that the three functional forms proposed by sb are best regarded as statistical demand functions integrable into an arbitrary neoclassical utility function only at some base point sb s method of deriving consumer demand functions is to replace the utility level in the hicksian demand functions by real income they maintain this approach is possible because certain index numbers can be estimated which when used to deflate nominal income provide estimates of changes in real income that correspond exactly to changes in utility levels p 676 the problem with this approach is that in contrast to output in producer theory utility is unobservable thus arbitrary changes in utility cannot be calculated from changes in real income unless we know the parameters of the utility functions this is true regardless of how accurately real income is measured this is equivalent to saying that in general the relationship between changes in utility and changes in real income is not independent of prices to verify this claim consider the total differential of the hicksian demand function xi u p which can be written 1 d log x

asymmetric tax competition abstract the paper analyzes nash equilibrium when two jurisdictions set tax rates on a tax base which is mobile between them population differences imply tax differences the smaller jurisdiction levies a lower tax rate in equilibrium and its residents are better off than those in the larger jurisdiction the nash equilibrium is inefficient if the two jurisdictions merged the resulting allocation would be efficient however if differences in population are great enough residents of the small jurisdiction would be made worse off by such a merger

a cross section demand analysis of spanish provincial food consumption i follow the differential approach in building three demand models of spanish cross province food consumption patterns the models include quadratic income terms for estimating the widely varying income responses one expects from cross section data the proposed models are also flexible in permitting alternative levels of aggregation across goods a nonnested testing procedure is used to identify the best model both the flexibility of the quadratic income term and the flexibility of alternative aggregation levels are important in the analysis of spanish food consumption patterns

the capital energy substitutability debate a new look over the last twenty years many studies have been made of the elasticity of substitution between capital and labor the reported estimates are highly variable and reveal an apparent dichotomy between cross sectional and time series studies the former suggest that capital and energy are substitutes while the latter suggest the converse all these studies reported allen partial elasticities of substitution we suggest that the morishima elasticity may be a more useful measure for the issues of concern to capital energy substitution we calculate the morishima elasticities from parameters estimated in a selection of earlier studies and find no excessive variability nor any evidence of the time series cross section dichotomy capital and energy are morishima substitutes copyright 1995 by mit press

induced innovation and energy prices this paper uses u s patent data from 1970 to 1994 to study the impact of energy prices on energy efficient innovations theories of technological change have focused both on demand side factors which spur innovative activity by increasing the value of new innovations and supply side factors such as scientific advancements that make new innovations possible data on demand side factors are easily obtained but data on supply side factors that influence innovation are not readily available this paper uses patent citations as a measure of the usefulness of the existing base of scientific knowledge citations to previous patents are used to construct productivity estimates which measure the usefulness of the existing stock of knowledge to inventors in a given energy field for any given year these estimates are then combined with data on demand side factors to estimate a model of induced innovation in energy technologies the results indicate that both energy prices and the supply of knowledge have strongly significant positive effects on innovation the paper concludes with a discussion of the implication of this work for environmental policy

do countries compete over corporate tax rates this paper tests whether oecd countries compete with each other over corporate taxes in order to attract investment we develop two models with firm mobility countries compete only over the statutory tax rate or the effective average tax rate while with capital mobility countries compete only over the effective marginal tax rate we estimate the parameters of reaction functions using data from 21 countries between 1983 99 we find evidence that countries compete over all three measures but particularly over the statutory tax rate and the effective average tax rate this is consistent with a belief amongst governments that location choices by multinational firms are discrete we also find evidence of concave reaction functions consistent with the model outlined in the paper

a regional analysis of food consumption in spain abstract working s model of the engel curve is applied to food and staple food expenditures with two years spanish provincial data the functional form of working s model is tested against two other specifications and cannot be rejected the estimation results are quite comparable with those obtained by other authors we also find that spain has experienced a substantial change in the pattern of food consumption during the 1970s

oil production responses to price changes an empirical application of the competitive model to opec and non opec countries abstract falling oil prices over the last decade accompanied by over production by some opec members and the growth of non opec supply warrant further empirical investigation of the competitive model to ascertain production behavior a supply function based on a modification of griffin s model is estimated using data from 1973 1997 the sample period unlike griffin s however includes phases of price increase 1970s and price decrease 1980s 1990s thus providing a better framework for examining production behavior using the competitive model the opec results do not support the competitive hypothesis instead a negative and significant price elasticity of supply is obtained this result offers partial support for the target revenue theory for most of the non opec members the estimates support the competitive model opec s loss of market share and the drop in the share of oil based energy should signal adjustments in price and quantity based on a competitive world market for crude oil

digitalization and energy consumption does ict reduce energy demand abstract this article investigates the effect of digitalization on energy consumption using an analytical model we investigate four effects 1 direct effects from the production usage and disposal of information and communication technologies ict 2 energy efficiency increases from digitalization 3 economic growth from increases in labor and energy productivities and 4 sectoral change tertiarization from the rise of ict services the analysis combines empirical and theoretical findings from debates on decoupling energy consumption from economic growth and from debates on green it and ict for sustainability our main results effects 1 and 3 tend to increase energy consumption effects 2 and 4 tend to decrease it furthermore our analysis suggests that the two increasing effects prevail so that overall digitalization increases energy consumption these results can be explained by four insights from ecological economics a physical capital and energy are complements in the ict sector b increases in energy efficiency lead to rebound effects c ict cannot solve the difficulty of decoupling economic growth from exergy d ict services are relatively energy intensive and come on top of former production in future digitalization can only boost sustainability when it fosters effects 2 and 4 without promoting effects 1 and 3

modelling energy and non energy substitution a brief survey of elasticities estimating the degree of substitution between energy and non energy inputs is the key for any evaluation of environmental and energy policies yet given the variety of substitution elasticities the central question arises as to which measure would be most appropriate apparently allen s elasticities of substitution have been the most used measures in applied production analysis in line with frondel 2004 this paper argues that cross price elasticities are preferable for many practical purposes this conclusion is based on a survey of classical substitution measures such as those from allen morishima and mcfadden the survey highlights the fact that cross price elasticities are their essential ingredients

constant utility paths and irreversible global warming this paper shows that the hartwick rule for sustainable utility with depletable resources still applies to the case of the greenhouse effect from fossil fuel carbon emissions although a carbon tax is necessary for sustainable utility it is sufficient that the sum of net energy rents and carbon tax revenues is invested in reproducible capital examination of recent savings rates and energy cost shares suggests that this may be difficult to achieve with current global savings rates jel classification q32

economic integration and the relationship between profit and wage taxes this paper analyzes the development of the ratio of corporate taxes to wage taxes using a simple political economy model with workers and capitalists that own internationally mobile and immobile firms among other results our model predicts that countries reduce their corporate tax rate relative to the wage tax when preferences for public goods increase or when the share of capital employed in multinational firms is rising we further show how an increase in the wage share changes both the relative size of tax bases and the political influence of different income groups the predicted relationships are tested using panel data for 23 oecd countries for the period 1980 through 2004 the results of the empirical analysis support our main hypotheses

dynamic factor demands and the effects of energy price shocks a dynamic model is used to understand how sharp changes in energy prices affect investment behavior employment and energy use the authors discuss the theory behind their model selection model specifications estimation methods and data list parameter estimates and elasticities for the selected model and describe the simulations they conclude that 1 the data strongly reject the hypothesis of constant returns to scale within their specification of aggregate production 2 the data indicate adjustment costs on labor are small and 3 their results help reconcile some of the conflicting estimates of energy demand elasticities appearing in recent literature 23 references 3 figures 3 tables

pigou tiebout property taxation and the underprovision of local public goods abstract pigou s proposition that the use of distorting taxes rather than neutral head taxes reduces public service levels is examined in this paper a simple model with a national system of competing local governments is utilized to demonstrate that the use of a distorting property tax on mobile capital decreases the level of residential public services the case where public services are an intermediate producer good is also considered

engineering and econometric interpretations of energy capital complementarity comment in a recent paper in this review ernst berndt and david wood provide a useful clarification of gross and net complementarity pointing out that energy and capital can be gross substitutes in a production subfunction and yet net complements in the aggregate production function using this theoretical proposition they attempt to reconcile the econometric findings of energy capital complementarity with other studies finding energy capital substitutability their reconciliation rests on the finding that those studies finding energy capital substitutability considered only capital k labor l and energy e by omitting materials m one obtains only a gross elasticity the net elasticity which allows for the additional substitution between the kle aggregate and m can indicate energy capital complementarity in fact klem studies generally find energy and capital complementarity the purpose of this comment is to question whether the net and the gross elasticity distinction provides such a reconciliation among the econometric results i agree that this explanation tends to reduce the disparity between the original berndt wood elasticity estimate and griffin gregory yet three independent sources of evidence suggest that the omission of m is not a sufficient explanation and probably not even a major explanation for the disparity of findings first the difference between the gross elasticity in a kle submodel and the net elasticity in a klem model depends critically on the elasticity of substitution between m and kle let us adopt the berndt wood notation and consider their mathematical example which demonstrates the possibility of gross capital energy substitutability as in the griffin gregory study with net capital energy complementarity

greenfield versus merger acquisition fdi same wine different bottles relying on a large foreign direct investment fdi transaction level dataset unique both in terms of disaggregation and time and country coverage this paper examines patterns in greenfield gf versus merger acquisition ma investment although both are found to seek out large markets with low international barriers important differences emerge ma is more affected by geographic and cultural barriers and exhibits opportunistic behaviours as it is more sensitive to short run changes such as a currency crisis on the other hand gf is relatively driven by long run factors such as origincountry technological and institutional development or comparative advantage these empirical facts are consistent with the conceptual distinction made between these two modes i e ma involves transfer of ownership for integration or arbitrage reasons while gf relies on firms own capacities which are linked to the origin countries attributes they also suggest that gf and ma are likely to respond differently to policies intended to attract fdi

energy and capital substitutes or complements a note on the importance of testing for non neutral technical progress this note investigates the importance of testing the validity of the hicks neutral technical progress assumption in the context of examining the substitutability or complementarity between capital labour and energy in the uk industrial sector it is found that the hypothesis of neutral technical progress must be rejected in favour of the non neutral hypothesis with technical progress thus biased to using both capital and energy but to saving labour in addition it is found that all three factors are substitutable for one another when non neutral technical progress is modelled

homogeneous profit tax effects for heterogeneous firms in most countries profit taxation is probably much more relevant nowadays than trade liberalisation when it comes to firm level decisions about investment empirically firms are quite heterogeneous with regard to fixed costs the composition of assets tangible versus intangible machinery versus buildings etc and the financing of investments then even uniform changes in profit tax instruments cause heterogeneous responses of firm level effective tax rates and hence after tax profits we argue that with similar profit margins firms would then require pre tax profits to differ as well governments change statutory profit tax rates and by virtue of firms heterogeneity they cause stark selection effects which are mainly related to heterogeneous fixed rather than variable costs we compute costs of capital for a large sample of firms to illustrate how homogeneous changes in tax instruments hit firms differently using bureau van dijk s orbis database we illustrate that the effects of changes in statutory instruments have relatively large systematic variance components across industries within countries and also relatively large ones of firms within industries and countries

raw materials profits and the productivity slowdown a factor price frontier framework is used to clarify the analogy of an increase decrease in raw material prices with autonomous technological regress progress factor price profiles are estimated for the manufacturing sector of the united states the united kingdom germany and japan the production model in conjunction with estimates obtained from the factor price frontier attributes much of the slowdown in manufacturing productivity to the rise in relative raw material prices part of the apparent productivity riddle may have to do with the use of double deflated national accounting measures of value added which have an inherent measurement bias

structural change and convergence of energy intensity across oecd countries 1970 2005 abstract this paper uses new and unique data derived from a consistent framework of national accounts to compute and evaluate energy intensity developments across 18 oecd countries and 50 sectors over the period 1970 2005 we find that across countries energy intensity levels tend to decrease in most manufacturing sectors in the service sector energy intensity decreases at a relatively slow rate with diverse trends across sub sectors a decomposition analysis reveals that changes in the sectoral composition of the economy explain a considerable and increasing part of aggregate energy intensity dynamics a convergence analysis reveals that only after 1995 cross country variation in aggregate energy intensity levels clearly tends to decrease driven by a strong and robust trend break in manufacturing and enhanced convergence in services moreover we find evidence for the hypothesis that across sectors lagging countries are catching up with leading countries with rates of convergence that are on average higher in services than in manufacturing aggregate convergence patterns are almost exclusively caused by convergence of within sector energy intensity levels and not by convergence of the sectoral composition of economies

meat meets meta a quantitative review of the price elasticity of meat the price elasticity of meat has been estimated in numerous studies that utilize a variety of disparate modeling procedures in light of differences in the literature a meta analysis is performed to assess the sensitivity of the meat price elasticity to a number of characteristics including the type of meat specification of demand nature of data estimation method characteristics of the publication outlet and location of demand the results from estimating linear and box cox meta regressions coupled with different panel data treatments reveal that these characteristics have differing influence on the reported price elasticity

energy substitution in u s manufacturing a regional approach one response of economists to energy market developments of the 1970s was to launch a series of studies in which the objective was to estimate energy substitution parameters characterizing important sectors of the u s economy relatively high substitution elasticities between energy and other inputs would permit firms to mitigate the effects of energy price increases by shifting to less energy intensive factor proportions the seminal work in this effort was carried out by berndt and wood 5 griffin and gregory 14 pindyck 28 halvorsen 16 and fuss 12 the research was substantially abetted by developments in production theory where the work of mcfadden 23 diewert 8 and christensen jorgenson and lau 6 yielded new and flexible production and cost function forms empirical work on energy substitution has continued 2 for the most part the data analyzed have been highly aggregative applying to say total u s manufacturing or perhaps to the various two digit sectors comprising that total to date little effort has been given to investigating energy substitution relationships at the regional level in the u s this is unfortunate since we know that the u s economy is actually composed of regions which are differently endowed with resources have developed at different rates and are comprised of different sectoral mixes the distinct possibility exists that regions differ in terms of the way in which energy inputs relate to other inputs in production furthermore even though the energy crisis may seem to be a national phenomenon national policy responses are worked out within a context of shifting and colliding regional conflicts stemming in large part from real or imagined perceptions of how energy market developments impact different regions it would seem especially important therefore to identify

the impact of green innovation on energy intensity an empirical analysis for 14 industrial sectors in oecd countries abstract this paper analyses the impact of green innovation on energy intensity in a set of 14 industrial sectors in 17 oecd countries over the 1975 2005 period we create a stock of green patents for each industrial sector and estimate a translog cost function to measure the impact of green innovation on energy intensity next to other factors such as input substitution and autonomous technical change we find that green innovation has contributed to the decline in energy intensity in the majority of sectors the median elasticity of energy intensity with respect to green patenting is estimated at 0 03 in our sample hence a 1 increase in green patenting activities in a given sector is associated with a 0 03 decline in energy intensity the magnitude of the effect is robust across various specifications and is larger in more recent years a decomposition exercise shows that overall half of the decrease in energy intensity over the sample period is related to changes in input prices and half to changes in production technologies

environmental taxes and international spillovers the case of a small open economy abstract in the existence of trade interaction a sub global climate change policy can generate externality which can cause competitiveness issues for the producers in compliant regimes however among compliant regions a small economy also receives a significant spillins effect when a large economy takes some regulatory actions that affect particularly the world prices of traded commodities this externality can have notable impacts on the efficiency and pollution abatement opportunities of the small compliant regime with a trivial converse effect in some cases these impacts on the efficiency and emissions abatement can be in opposite directions we capture these findings by incorporating two protection polices i e border tax adjustment and free emissions allocations to emission intensive and trade exposed industries in a multi region analytical and numerical general equilibrium modeling framework these results convey that the large economies hold leading strategic positions towards a cooperative global climate change movement because of their policies influences on the small economies

capital energy substitution evidence from a panel of irish manufacturing firms abstract we use a translog cost function to model production in the irish manufacturing sector over the period from 1991 to 2009 we estimate both own and cross price elasticities and morishima elasticities of substitution between capital labour materials and energy we find that capital and energy are substitutes in the production process across all firms we find that a 1 rise in the price of energy is associated with an increase of 0 04 in the demand for capital the morishima elasticities which reflect the technological substitution potential indicate that a 1 increase in the price of energy causes the capital energy input ratio to increase by 1 5 the demand for capital in energy intensive firms is more responsive to increases in energy prices while it is less responsive in foreign owned firms we also observe a sharp decline in firms responsiveness in the first half of the sample period

the demand for energy in swedish manufacturing industries the price sensitivity of energy demand and the substitution possibilities between energy and other aggregate production factors in swedish manufacturing industries are analyzed both homothetic and nonhomotethic specifications of a translog cost function are estimated using annual data for the period 1952 1976 for total swedish manufacturing and for 12 manufacturing subsectors the results indicate that relative changes in energy prices have significant effects on energy consumption there is evidence however that adjustment to higher energy prices may be accompanied by a deceleration in investment

flexible consumer demand systems and linear estimation food in india demand equations in real income and nominal prices can be obtained directly by differentiating a cost function in which output is replaced by real income this derivation is possible because recent advances show that certain index numbers provide close approximation to real income without knowledge of the utility function parameters three flexible functional forms corresponding to well known flexible cost functions were used to estimate food demand elasticities time series and cross sectional data from ten indian states for twenty years were used the estimates provide a complete set of expenditure price and cross price elasticities for four commodities some close substitutes

asymmetric substitutability between energy and capital evidence from the manufacturing sectors in 10 oecd countries abstract this paper investigates the substitutability between energy and capital in the manufacturing sectors of ten oecd countries since 1980 by applying a cost function approach that has been widely used to analyze industrial energy demand first we attempt to determine the source of the disagreement in the literature on the substitutability between energy and capital and reach a conclusion regarding the substitutability between energy and capital dividing energy and capital into sub inputs we analyze their substitutability the empirical results indicate that fuel tends to complement capital in most countries whereas electricity and capital are substitutes thus this study confirms that heterogeneity in energy sources is a primary component of the systematic variation in the substitutability between energy and capital second we examine asymmetric substitutability between energy and capital by estimating the morishima elasticity of substitution the estimates of the morishima elasticity of substitution demonstrate that the substitution of energy for capital has dominated the substitution of capital for energy this asymmetric substitutability is natural from the producer perspective because capital costs are much greater than energy costs in most countries these results imply that the adoption of energy saving technologies has not been induced in response to increased energy prices

property taxation nash equilibrium and market power abstract differences in tax policy arise from differences in the number of jurisdictions in a metropolitan area following wildasin 4 and bucovetsky 2 the tax rates in the jurisdictions are determined in a nash game in the tax rate the tax rate and public service level as well as the welfare of residents increase as the number of jurisdictions in the metropolis decreases

energy capital substitutability complementarity the dichotomy abstract changes in the price of energy affect not only the demand for energy but also the rates of capital formation and labour utilization these changes depend on the functional relationship between energy and the primary factor inputs in particular the relationship between energy and capital has been characterized by major conflicting evidence time series data classify the two inputs as complements by contrast pooled cross section studies conclude that capital and energy aresubstitutes in the production process in this case higher priced energy will stimulate the demand for investment while several reconciliation attempts on this disparity deserve marked attention the most prominent explanation is that time series studies reflect short term relationships and cross section analyses capture long term effects

foreign patenting in the u s as a technology indicator the case of norway abstract foreign patenting in the u s has been considered to be a useful technology indicator in comparisons between countries in order to shed light on this topic this paper will try to explain foreign patenting in the u s by way of data for one country norway a crucial question is what role is played by exports in explaining the foreign patent activity is the u s patenting just an indicator of the export performance or is it the other way around that technology measured by foreign patent activity is an important trade explanatory variable the first part of this paper deals with the relationship between norwegian u s patenting and export to the u s by way of time series analysis on data from 1883 to 1980 then some more detailed analysis are done on industry level data from 1920 and from 1960 1980 an hypothesis is further tested for the possible relationship between foreign u s patenting and the international business cycles finally a detailed but tentative analysis is done on firm level data for the years 1969 1980 the results lend partial support to the assumption that foreign u s patent activity reflects innovative activity in the country where the patents originated a major advantage in using foreign patenting in the u s as a technology indicator is that this type of data in general seems to be of a higher quality than domestic patent data

electricity demand elasticities and temperature evidence from panel smooth transition regression with instrumental variable approach abstract this study applies a non linear model i e the recently developed panel smooth transition regression pstr model and takes into account the potential endogeneity biases to investigate the demand function of electricity for 24 oecd countries from the period 1978 2004 our empirical results demonstrate that there is a strongly non linear link among electricity consumption real income electricity price and temperature a result that is new to the literature as real income rises electricity consumption rapidly increases first and after the level of real income exceeds approximately us 2500 its increasing rate turns slow down an increase in electricity price has a negative or no influence on electricity consumption evidence of a u shaped relationship between electricity consumption and temperature is supported and the threshold value of temperature is approximately 53 f which is endogenously determined furthermore the estimated elasticities of time dynamic indicate that electricity demand is income inelastic price inelastic and temperature inelastic as time goes on the absolute elasticities of electricity demand gradually decrease with respect to real gdp and electricity price whereas they gradually increase with respect to temperature suggesting that the impact of temperature on electricity demand is becoming more important in recent years

estimating the potential for electricity savings in households abstract improving efficiency in the use of energy is an important goal for many nations since end use energy efficiency can help to reduce co 2 emissions furthermore since the residential sector in industrialised countries requires around one third of the end use electricity it is important for policy makers to estimate the scope for electricity saving in households to reduce electricity consumption by using appropriate steering mechanisms we estimate the level of technical efficiency in the use of electricity using data from a swiss household survey we find an average inefficiency in electricity use by swiss households of around 20 to 25 bottom up economic engineering models estimate the potential in switzerland to be around 15 in this paper we use a sub vector input distance frontier function based on economic foundations our estimates lie at the upper end of the electricity saving potential estimated by the afore mentioned economic engineering approach

limits to substitution and irreversibility in production and consumption a neoclassical interpretation of ecological economics abstract there are many methodological approaches within ecological economics one of the principal modes of analysis is a modified version of the standard neoclassical model this paper examines the parallels which emerge between the ideas of some ecological economists concerning production and the ideas of others concerning consumption when these ideas are interpreted in the neoclassical paradigm it is well known that ecological economics is characterized by arguments concerning limits to substitution between inputs energy natural capital etc vs manufactured capital labor etc in production and the implications these have for sustainability however various authors have also expressed concerns regarding limits to substitution in consumption either between environmental assets and other goods or between basic needs commodities and other goods though the specific reasons for non substitution are different in the production and consumption cases the underlying theme is that individual commodities and other inputs have unique physical or other properties which make them poor substitutes ideas about irreversibility in production and economic development are also prominent in ecological economics likewise many authors have argued for similar irreversibilities in consumption behavior in analogy to the term technological change i coin the term preferential change to describe these phenomena the linking themes in this case are that the economy environment system is evolutionary in character and that external effects intended and unintended consequences of actions or processes imposed on other parties or resources are all pervasive

energy industry investment influences total factor productivity of energy exploitation a biased technical change analysis abstract technical progress plays a critical role in sustaining a clean world through energy efficiency improvement the optimal energy industry investment not only reduces the cost for energy industry but also avoids environmental degradation via over investment this study addresses both technical progress and energy industry investment we present a novel measuring framework for the malmquist total factor productivity index mi of energy exploitation and accordingly analyze the mi of china s 30 provinces between 2006 and 2016 based on the efficiency measurement results we further examine the nonlinear impact of energy industry investment on the mi under different types of biased technical change the results show that the growth rate of mi is 1 92 the growth rates of mi s two decomposition indices technical efficiency and technical change are 0 63 and 1 59 respectively indicating that the mi rise is primarily ascribed to technical change the mean values of the output biased technological change the input biased technological change and the magnitude of technological change are 1 0443 1 0066 and 0 9723 respectively indicating that of the three output biased technological change is the most significant contributor to technical change the variation of these technical changes in different provinces provides information that could help in designing an effective energy policy to increase efficiency for a specific province according to the threshold estimates of energy industry investment on the mi the effect is significant within the range greater than the first threshold value we find that the mi increases by 0 0001 when energy industry investment increases by 100 000 000 yuan