SOME MEASURES OF REGIONAL-INDUSTRIAL INTERFUEL SUBSTITUTION POTENTIALS

One of the more important issues in the current energy dilemma concerns the potential for the substitution of coal for oil and gas in the manufacturing sector. Among the parameters required for such an assessment are the degrees to which various energy forms (oil, coal, gas, and electricity) substitute for one another in response to changes in their relative prices. The partial and preliminary results are presented of a research effort designed to comparatively examine substitution and demand elasticities within the manufacturing sectors of several important regions of the United States. Demand functions for the alternative energy inputs are derived from a more general model of producer behavior. Data for the manufacturing sectors of thirty-three states for the years 1971, 1974, 1975 are pooled into three regional groupings. Two statistical specifications are then estimated. The first is predicated on the assumption that the response parameters are completely heterogeneous across the three regions. The second has regional equality imposed on the parameter estimates and is identical to the complete pooling of the observations. From the above, the regional interfuel substitution and demand elasticities are determined and comparatively examined. Several notes of caution are introduced regarding the use of these (or other representative) elasticities as an aid in the policy formulation and evaluation process. The extreme care which must be taken in both interpreting and comparing alternative elasticity estimates from energy-only models is emphasized. In addition, potentially serious misinformation is shown to occur when completely pooled cross-regional and time series data are used to estimate national (or sub-national) average response parameters. (ERA citation 03:052891)

  • Supplemental Notes:
    • Fifty-third Conference of the Western Economic Association, Honolulu and Kona, HI, USA, 20 Jun 1978.
  • Corporate Authors:

    Brookhaven National Laboratory

    Associated Universities, Incorporated
    Upton, NY  United States  11973

    Department of Energy

    1000 Independence Avenue, SW
    Washington, DC  United States  20585
  • Authors:
    • Goettle IV, E J
  • Publication Date: 1978-5

Media Info

  • Pagination: 43 p.

Subject/Index Terms

Filing Info

  • Accession Number: 00186383
  • Record Type: Publication
  • Source Agency: National Technical Information Service
  • Report/Paper Numbers: CONF-780651-1
  • Contract Numbers: EY-76-C-02-0016
  • Files: TRIS
  • Created Date: Feb 27 1979 12:00AM