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- Title
Factor Demand and Substitution in a Developing Country: Energy Use in Mexican Manufacturing.
- Authors
Sterner, Thomas
- Abstract
Abstract A translog cost function is used to estimate elasticities of substitution and factor demand in a number of Mexican industries (1966-81). The results vary, but factor demand is on average quite price sensitive and elasticities are of the same order of magnitude as in other studies for both developed and developing countries. This indicates that factor demand does adapt 'to price changes, even in countries which are dependent on buying technology abroad. It also shows that a policy of heavy subsidies to domestic energy consumption is the main reason for growing energy intensity, thereby casting some light on the allocation costs of such subsidies.
- Subjects
MEXICO; MANUFACTURED products; SUBSTITUTION (Economics); ELASTICITY (Economics)
- Publication
Scandinavian Journal of Economics, 1989, Vol 91, Issue 4, p723
- ISSN
0347-0520
- Publication type
Article
- DOI
10.2307/3440216