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Production Function Models Estimation

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Energy Demand in Industry

Part of the book series: Green Energy and Technology ((GREEN))

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Abstract

In this chapter the first group of econometric models the Cobb-Douglas production function and the Translog production function are estimated. The findings from estimating the Cobb-Douglas production function model reveal that (i) In general the South Korean industries are exhibiting increasing returns to scale , (ii) There is a slight substitution pattern between energy and ICT capital, and (iii) There is a significant and positive impact of energy use on the production level in the South Korean industries.

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Notes

  1. 1.

    All values are measured in millions of Korean Won.

  2. 2.

    The antilog is calculated because the estimated function was based on logarithm values.

  3. 3.

    The values are as follows: (|r| > 0.258 for 99 % level, (|r| > 0.196 for 95 % level, and |r| > 0.1645 for 90 % level).

  4. 4.

    The curvature property cannot be fully satisfied in each point of the data, as stated by Sauer et al. (2006): “With respect to the Translog production function curvature depends on the input bundles…. For some bundles quasi-concavity may be satisfied, but not for others. Hence, what can be expected is that the condition of negative-semidefiniteness of the bordered Hessian is met only locally or with respect to a range of bundles”.

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Authors and Affiliations

  1. Technology Management, Economics, and Policy Program, College of Engineering, Seoul National University, San 56-1, Shillim-Dong, Kwanak-gu, Seoul, 151-742, South Korea

    Nabaz T. Khayyat

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  1. Nabaz T. Khayyat
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Correspondence to Nabaz T. Khayyat .

Appendix A: Elasticities Estimates for the Translog Production Function

Appendix A: Elasticities Estimates for the Translog Production Function

Table 7.5 Mean input elasticities by year (elasticity of output with respect to each input)
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Table 7.6 Mean input elasticities by industry (elasticity of output with respect to each input)
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Table 7.7 Mean input elasticities by industries’ characteristics: technology level (elasticity of output with respect to each input)
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Table 7.8 Mean input elasticities by industries’ characteristics: export orientation (elasticity of output with respect to each input)
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Table 7.9 Mean input elasticities by industries’ characteristics: size (elasticity of output with respect to each input)
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Table 7.10 Mean input elasticities by industries’ characteristics: R&D level (elasticity of output with respect to each input)
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Table 7.11 Mean input elasticities by industries’ characteristics: oil crisis shock (elasticity of output with respect to each input)
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Khayyat, N.T. (2015). Production Function Models Estimation. In: Energy Demand in Industry. Green Energy and Technology. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-9953-9_7

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  • DOI: https://doi.org/10.1007/978-94-017-9953-9_7

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  • Publisher Name: Springer, Dordrecht

  • Print ISBN: 978-94-017-9952-2

  • Online ISBN: 978-94-017-9953-9

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