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This paper provides further arguments why Jacobson and Delucchi’s (JD) critiques of my paper are misplaced. It also provides additional references to work that reached different conclusions than Jacobson et al. Work by JD and others is useful in identifying the plethora of assumptions required to conclude that intermittent renewables can now be economically substituted for all current uses of fossil fuels throughout the entire economy. [ABSTRACT FROM AUTHOR]

Intentional mislabelling of seafood is a widespread problem, particularly with high-value species like tuna. In this study we examine tuna mislabelling, deliberate species substitution, types of substitution and its impact on prices. The survey covered the commercial chain, from Merca-Barna to fishmongers and restaurants in the Spanish Autonomous Community of Catalonia. To understand the geographic extent of the problem we also sampled Merca-Madrid, Europe’s biggest fish market, and Merca-Málaga for its proximity to the bluefin tuna migratory route and trap fishery. Monthly surveys were carried out over one year. The results showed a high deficiency in labelling: 75% of points of sale and 83% of restaurants did not specify the species, and in those cases the name of the species had to be asked. A total of 375 samples were analysed genetically, the largest dataset gathered in Europe so far. The identified species were Thunnus albacares, Thunnus thynnus and Thunnus obesus. Species substitution began at suppliers, with 40% of observed cases, increasing to 58% at fishmongers and 62% at restaurants. The substitution was mainly on bluefin tuna (T. thynnus), 73% of cases. At restaurants, only during the bluefin fishing season, we observed a decrease of Bluefin tuna substitution and an increase of reverse substitution revealing some illegal fishing. The effect of species substitution on species prices was relevant: T. obesus increased its price by around €12 kg-1 when it was sold as bluefin. In view of the deficiency of labelling, the abuse of generic names and the lack of the bluefin catch document, we conclude that the Spanish regulations are ineffective, highlighting the need for policy execution, and the urgent need for information campaigns to Spanish consumers. [ABSTRACT FROM AUTHOR]

What has been the effect of competition from parallel imports on prices of locally sourced on-patent drugs? Did the 2002 Swedish mandatory substitution reform increase this competition? To answer these questions, we carried out difference-in-differences estimation on monthly data for a panel of all locally sourced on-patent prescription drugs sold in Sweden during the 40 months from January 2001 to April 2004. On average, facing competition from parallel imports caused a 15-17% fall in price. While the reform increased the effect of competition from parallel imports, it was only by 0.9%. The reform, however, did increase the effect of therapeutic competition by 1.6%. [ABSTRACT FROM AUTHOR]

Developing a quantitative science of sustainability requires bridging mathematical concepts from fields contributing to sustainability science. The concept of substitutability is central to sustainability but is defined differently by different fields. Specifically, economics tends to define substitutability as a marginal concept while fields such as ecology tend to focus on limiting behaviors. We explain how to reconcile these different views. We develop a model where investments can be made in knowledge to increase the elasticity of substitution. We explore the set of sustainable and optimal trajectories for natural capital extraction and built and knowledge capital accumulation. Investments in substitutability through knowledge stock accumulation affect the value of natural capital. Results suggest that investing in the knowledge stock, which can enhance substitutability, is critical to desirable sustainable outcomes. This result is robust even when natural capital is not managed optimally. This leads us to conclude that investments in the knowledge stock are of first order importance for sustainability. [ABSTRACT FROM AUTHOR]

Based on a simultaneous-equation model incorporating potential substitution of credit card loans for conventional consumer loans, this article finds that the demand for conventional consumer loans is negatively affected by the personal loan rate and positively associated with the credit card rate and real per capita disposable income and that the supply of conventional consumer loans is positively affected by the personal loan rate and bank deposits and negatively impacted by the federal funds rate and the real effective exchange rate. Hence, the bank lending channel for conventional consumer loans is confirmed as monetary easing to reduce the federal funds rate or increased deposits/reserves is expected to increase loan supply. [ABSTRACT FROM AUTHOR]

The article discusses the economic aspects of genocide, with a particular focus on the influence of economic factors on the choices and behaviors of perpetrators, victims, and third parties. The authors analyze the preferences of, costs incurred by, and resources available to each group. Topics include genocide prevention, monetary resources, substitution, and infrastructure.

In this paper we construct a simple two-period equilibrium model for analysing the impact of post-disaster transfer payments on economic growth. This model can be used to show that direct payment of disaster relief funds may aggravate rather than mitigate the negative impact of disasters on the economy. The substitution effect of direct transfer payment depresses post-disaster labour supply and hence economic growth. This conclusion from the theoretical model is tested using Chinese provincial panel data and applying generalised method of moments (GMM) system estimation. The empirical analysis largely confirms the theoretical predictions. In China, post-disaster transfer payments are indeed found to exacerbate the negative impact of disasters on economic growth. Therefore, we suggest that relief should be oriented to create work incentive in order to avoid its depressing effect on economic growth. [ABSTRACT FROM AUTHOR]

The article seeks a return to discussions about the substitute period in Argentina, in as so much as we consider a good deal in economical policies proposal during the last two governments in Argentina are referred to some proposals of J. D. Peron's development and redistribution program during his first two governments. Since we consider there is quite a debate about the borders and extent of the substitutive cycle, we consider it wise to elaborate a diagnosis on the objective conditions of the economic development, and hither to reformulate economic politics and interbourgeo is discussions, as well as the place of the labor class in alliances. Let us concentrate on the industrialization process due to substitution of import, in both its cycles, and hitherto we'll strive to identify analogies and possible coincidences in some proposals in the economic politics of the aforesaid governments. [ABSTRACT FROM AUTHOR]

This research is looking at the case of substitution of endowment that is no longer feasible with a more appropriate endowment ensuring that the benefit is to the good of the endowment and its beneficiaries in the process of substitution, according to the Islamic jurists, and The Law Of Procedure Before Saudi Courts, issued by the Royal Decree No.21 and dated 20.05.1421h [19 August 2000] and its implementation regulations, and which is being followed by The Holy City of Makkah courts. Statements of jurists in this issue along with related evidence were verified and their arguments were examined. Then, the statement "substitution of existing endowments that are no longer feasible with an appropriate endowment plan if the benefit is to the good of the endowment and its beneficiaries." was removed for further examination. This is because this statement is very close to intention of the legislator and the purpose of the endowments, which is to benefit beneficiaries. The Law Of Procedure before Saudi Courts, Articles (32, 250) and its implementation regulations, Articles (32/5, 250/3) have endorsed the selling of and transferring of endowments that are no longer feasible according to four conditions, which are: 1- Approval is needed from the official judge, where the endowment is available for sale. 2- Occurrence of benefit for the endowment and its beneficiaries, as determined by experts. 3- Immediately transfers its price to a similar property. 4- The high court approves. The case law of The Holy City of Makkah courts in the period between 17.09.1371h and 26.04.1383h, found that if the intended transfer balances the price of the endowment after being announced three times, and the owner of the substitution has been ratified, then the transaction commences. [ABSTRACT FROM AUTHOR]

It is a well-known fact that several prominent bargaining solutions are responsive to changes in status-quo (i.e., disagreement or fallback) payoffs. When an agent’s status-quo payoff increases, his solution payoff either stays the same or increases. A fully general result for these solutions’ status-quo point ranking is impossible to establish. In this paper, using an important class of bargaining problems, a ranking of the relative status-quo point responsiveness of prominent bargaining solutions is obtained. Using the Constant Elasticity of Substitution class of bargaining problems, regardless of the concavity of the Pareto frontier and the level of increase in one’s status-quo payoff, we find the equal gains solution is the most responsive with respect to changes in status-quo payoffs, followed by the Nash solution. The equal sacrifice solutions is the least responsive, followed by the Kalai/Smorodinsky solution. [ABSTRACT FROM AUTHOR]

We use micro data for 10,318 plants to estimate elasticities of substitution between energy and capital. We find that energy and capital are substitutes. We also find that estimates of Allen elasticities of substitution – a standard measure of substitution – are sensitive to varying data sets and levels of aggregation. In contrast, estimates of Morishima elasticities of substitution – which are theoretically superior to the Allen elasticities – are more robust. We conclude that micro data provide more accurate elasticity estimates than those obtained from aggregate data and the Morishima elasticities are the preferred measure of factor substitution. [ABSTRACT FROM AUTHOR]

This paper surveys the recent theoretical and empirical literature that explores the relations between aid and trade and asks about the complementarity or substitution effects at work. We distinguish between the effects of aid on trade flows and on trade policies, of the donor as well as the recipient countries. Special focus is given on trade facilitation, or 'aid for trade'. [ABSTRACT FROM AUTHOR]

The fundamental prediction of the Consumption-based Capital Asset Pricing Model (CCAPM) relates asset returns to their covariance with the intertemporal marginal rate of substitution (IMRS). With utility subjected to constant relative risk aversion, the IMRS is characterized by only one economic variable namely, consumption growth. One explanation for the disappointing empirical performance of the CCAPM model may be that the constant relative risk aversion specification is too restrictive. In this article we consider alternative specifications and compare their empirical performance with the reference model using Canadian data. [ABSTRACT FROM AUTHOR]

The paper argues that a Cobb-Douglas specification may be a reasonable description of the Finnish aggregate production function when a sufficiently long time period (the 20th century) is considered. It is, however, a misleading description of the production technology for the post- WWII period. Controlling for biased technical change, the elasticity of substitution is significantly below one, close to 0.5, during 1945-2003. Given that similar results have been obtained for the U.S. economy, the analysis shows that the value of the elasticity of substitution cannot be dependent on some specific structure of economic institutions but is likely to reflect more general aspects of technology and production. [ABSTRACT FROM AUTHOR]

This paper empirically examines the exchange rate pass-through elasticity, using sheep meat exports from the two major exporters, Australia and New Zealand. The results show the coexistence of incomplete and complete pass-through in the international sheep meat industry. The Australian .sheep meat exporters have a relatively .smaller market share than New Zealand and are not able to exercise monopoly power. New Zealand producers, on the other hand, can increase their markups in those destination countries where they have a large market share. [ABSTRACT FROM AUTHOR]

We consider a discrete-time two-sector CES economy with sector specific external effects and partial depreciation of capital. We show that the occurrence of local indeterminacy of equilibria depends on an interplay between factor substitutability and capital depreciation. When the elasticity of substitution is less than one, local indeterminacy may occur with low depreciation of capital. When the elasticity of substitution is greater than one, local indeterminacy is more likely if the rate of depreciation is high. [ABSTRACT FROM AUTHOR]

The article presents a reply to a comment regarding the use of Engel's law to explain economies of scale including its application in food preparation. The cost of the time spent in food preparation is not included in food expenditures. The assertion, which is sometimes referred to as Engel's second law, can be used to derive compensating variations by calculating, for a household of any particular composition, the amount of income or total expenditure that would be required to equate its food share with that of a reference household. In the presence of economies of scale, a larger household with the same per capita income has been overcompensated compared with a smaller one. If food is a normal good and there are few economies of scale in food and limited possibilities of substitution away from it, the per capita demand for food will rise. Because per capita total expenditure is being held constant, the budget share of food, and per capita food expenditure divided by per capita total expenditure, will rise. Engel's law, first observed empirically by Engel and as understood in the economics literature, says that there is an inverse relationship between the food share and total household expenditure, or sometimes income.

In this paper, we extend the resource-based theory of the firm to show that it can be used to analyse the effectiveness of competitive strategies. Specifically, we demonstrate that political strategies aimed at raising rivals' costs by blocking the use of substitute resources may create the opportunity for a firm to capitalize on resources that are valuable, rare, and costly to imitate. The uses of political activity to block the availability of substitute resources are discussed in detail and examples are provided to demonstrate how such strategies are used and to illustrate how successful they may be. This is an important extension of the resource-based theory because it demonstrates how the theory can be applied by researchers and practitioners. [ABSTRACT FROM AUTHOR]

Managerial resources, defined as the skills and abilities of managers, are important contributors to the entire bundle of firm resources that enable some firms to generate rents. Here we build on our original analysis (Castanias & Helfat, 1991) and present an expanded classification of managerial resources, elaborate on how this classification relates to the fundamental resource-based characteristics of value, scarcity, inimitability, and difficulty of substitution, and highlight the issue of appropriability of rents from managerial resources. We then move well beyond the original analysis to examine a large number of empirical implications of our model, including many contingency factors, and discuss recent empirical research. Finally, we suggest extensions of the model to include managerial cognition and social capital, and draw implications for resource-based theory more generally. [ABSTRACT FROM AUTHOR]

The article focuses on the "Surrogate Demand." We don't do all our own spending. Increasingly, we employ surrogates such as architects or lawyers, who spend our money for us. The question is what the consequence for economics is. The consumer demand ought to be viewed not as a monolithic concept but, rather, as consisting of two parts namely, direct demand and indirect, or, as it is here termed, surrogate demand. (A surrogate, according to Webster, is "one appointed to act for another."). Total demand, therefore, would be equal to direct plus surrogate demand. Some examples will illustrate: When a consumer buys a pound of apples in the supermarket, she or he is demonstrating direct demand, that is, no third party (surrogate) is involved in the transaction. On the other hand, when a consumer employs an architect to lay out plans for an addition to his or her home, it is the architect who then determines the amount and direct on of spending. Similarly, the consumer may employ a lawyer to pursue a case, the ultimate cost of which may not be known until all of the facets of the case are explored. Further, a consumer may have a discretionary account with a broker who then decides where and how much to invest. The purchase of a mutual fund is, in effect, a discretionary account since the fund managers determine investment strategies.

The authors' purpose in this paper is twofold: first, they hope to prove two theorems: (1) when two countries start from common initial conditions, the one with the higher elasticity of substitution will always experience, other things being equal, a higher income per head; and (2) any equilibrium values of capital-labor and income per head are increasing functions of σ. Their second objective is to make a number of suggestions. First, they hope to advocate the use of normalized CES functions in growth models. Second, the authors propose that empirical research in this area be based upon the 'Morishima-Blackorby-Russel' elasticity of substitution. Finally, the authors suggest some methods to determine the functional form of increasing-elasticity-of-substitution production functions.

A foundation is provided for a correct and accurate analysis of the relationship between monetary values and physical dimensions in economic production. A distinction is proposed between direct and indirect substitution. Linked to this, a classification is offered of various types of substitutability and complementarity relationships between production factors. It is argued that the neoclassical production function may be consistent with mass balance, but is unsuitable for a detailed and accurate understanding of changes in production that influence materials use. For this purpose, general production functions satisfying mass balance are formulated, drawing upon the proposed classifications. [ABSTRACT FROM AUTHOR]

In estimating the intertemporal elasticity of substitution, Hall finds that, when one takes account of time aggregation, point estimates are small and not significantly different from zero. He concludes that the elasticity is unlikely to be much above 0.1 and may well be zero. Applying improved inference methods to an economic model similar to Hall's, Hansen and Singleton show that there is considerably less precision in the estimation. We argue that the model used by these authors is misspecified because the intratemporal substitution between nondurable consumption goods and durable consumption goods is ignored. We use a two-step procedure that combines a cointegration approach to preference parameter estimation with generalized method of moments to take these effects into account. Our estimates for the intertemporal elasticity of substitution are positive and significantly different from zero, even when time aggregation is taken into account. [ABSTRACT FROM AUTHOR]

We solve the problem of the restrictions imposed on the Jacobian A at prices ... of the aggregate excess demand function x(p) of m agents in an exchange economy with l commodities, under the assumption of individual rationality. Given an arbitrary differentiable function x(p) satisfying homogeneity and Walras' law, we attribute rational individual excess demand functions x¹(p), …, xm (p) to the m agents such that at any arbitrarily specified vector ... aggregate excess demand is equal to x(...) and the following condition is satisfied: There exists a subspace M of dimension m such that the Jacobian at ... of x(p) and the Jacobian at ... of the aggregate excess demand function define the same linear function on M. If x (...) ࣔ 0, M can be taken to have dimension (m + 1). As an immediate consequence of our proof for m = 1 we show that even if ..., x(...), and Dx(...) are known for the excess demand function of a single agent, the substitution effect and the income effect cannot be unambiguously determined without knowledge of the utility function. We extend the results proved at a point to large open neighborhoods. We show that if x(p) is an arbitrary function which is bounded from below and satisfies homogeneity and Walras' law, and if x(...) ≠ 0, then we can find an open neighborhood G of ... and (l - 1) individually rational excess demand functions x¹ (p),…, xl-1 (p), such that ∑k=11-1 xk (p) = x(p) everywhere on G. [ABSTRACT FROM AUTHOR]

This paper explores anew the factor substitution assumptions of manpower planning activities. It finds several flaws in the oft-repeated argument that manpower planning studies should be abandoned in favor of rate of return analysis because the planning approach depends upon the assumption of fixed-coefficient production functions and the latter approach does not. For one thing, the choice of methodological approach depends upon matters other than the observed value of the elasticity of substitution. For another, it is not clear that factor substitutability has necessarily been ignored in either the theory or practice of manpower planning. [ABSTRACT FROM AUTHOR]

This article presents the observation that a retardation in output growth seems to have coincided with the introduction of the 1965 socio-economic reform in Yugoslavia. Putting the emphasis on the manufacturing sector, the authors offer a decomposition for the retardation based on a combination of institutional, technical and economic factors. It is argued that a capital-intensity bias produced by the reform, combined with low factor substitution elasticities, provides the key ingredients of the retardation during the 1966-1975 decade.

The article presents a discussion on the third rule of derived demand by Alfred Marshall. The rule claims that the elasticity of a products's derived demand has a positive correlation with the elasticities of substitution, demand for the product, supply of the substitute product, and the product's share in overall costs. The article discusses an analysis of the rule by John Hicks, who claimed that in perfectly competitive economies, the rule holds true only if the elasticity of demand for the product exceeds the elasticity of substitution. Hicks also claimed that if this relationship is reversed, the rule is also reversed. The article provides an examination of Hicks's analysis on Marshall's third rule of derived demand.

This study deals with the dynamic sales behavior of successive generations of high-technology products. New technologies diffuse through a population of potential buyers over time. Therefore, diffusion theory models are related to this demand growth. Furthermore, successive generations of a technology compete with earlier ones, and that behavior is the subject of models of technological substitution. Building upon the Bass (1969) diffusion model, we develop a model which encompasses both diffusion and substitution. We demonstrate the forecasting properties of the model by estimating parameters over part of the data and projecting shipments for later periods. [ABSTRACT FROM AUTHOR]

The Slutsky equation can be simply constructed as a parallelogram the area of which is proportional to the elasticity of substitution. New properties about the curvature of the demand functions can be derived at once from this demand, which may also be of help to explain the causes of economic growth. [ABSTRACT FROM AUTHOR]

Monopolist selling to a competitively structured downstream industry cannot reap the full monopoly rents available in the final product market when substitution possibilities are present in the final goods production function. As a result, intermediate product monopolists have been shown to have an incentive to integrate downstream, possibly engaging in a price-cost squeeze of the final good producers in an attempt to extend the monopoly to the terminal stage of production and obtain the maximum profits available in the industry under the cost and demand conditions extant. The upstream monopolist could obtain identical results by tying the purchase of nonmonopolized substitutable inputs to the purchase of the intermediate product over which the monopolist exercises control. If this proposition is true, then an intermediate-product monopolist has an alternative to the strategy of vertical integration which may be employed in circumstances where ownership integration is either infeasible or unattractive. More importantly, this proposition implies a previously unrecognized symmetry between the economic effects of tying and vertical integration, which in turn raises serious questions regarding the divergent treatment afforded by these alternative strategies under existing antitrust laws.

This paper concentrates on key principles inherent in the economic paradigm of utility in economics, the first being the universal substitutability of goods for each other at the margin. This principle asserts that a consumer can be compensated for the loss of a quantity of any good from the bundle he is consuming by the addition of a quantity of some, or any other, good. The conception that there is some single psychological expression of value called utility that can be maximized through consumption implies that all economic goods are substitutable for each other.

Examines the significance of the demand theorems attributable to time allocation theory. Propositions of the theory of consumer time allocation; Discussion on the meaningful demand theorems; Importance of income and substitution effects in consumer demand.

This paper investigates the testable restrictions on the time-series behavior of consumption and asset returns implied by a representative agent model in which intertemporal preferences are represented by utility functions that generalize conventional, time-additive, expected utility. The model based on these preferences allows a clearer separation of observable behavior attributable to risk aversion and to intertemporal substitution. Further, it nests the predictions of both the consumption CAPM and the static CAPM, and it allows direct tests of the expected utility hypothesis. We find that the performance of the non-expected utility model and tests of the expected utility hypothesis are sensitive to the choice of both consumption measure and instrumental variables. [ABSTRACT FROM AUTHOR]

We show how to use security market data to restrict the admissible region for means and standard deviations of intertemporal marginal rates of substitution (IMRSs) of consumers. Our approach (i) is nonparametric and applies to a rich class of models of dynamic economies, (ii) characterizes the duality between the mean-standard deviation frontier for IMRSs and the familiar mean-standard deviation frontier for asset returns, and (iii) exploits the restriction that IMRSs are positive random variables. The region provides a convenient summary of the sense in which asset market data are anomalous from the vantage point of intertemporal asset pricing theory. [ABSTRACT FROM AUTHOR]

This paper formulates and estimates a structural intertemporal model of labor supply. Using theoretical characterizations derived from an economic model of lifetime behavior, a two-step empirical analysis yields estimates of intertemporal and uncompensated substitution effects which provide the information needed to predict the response of hours of work to life-cycle wage growth and shifts in the lifetime wage path. [ABSTRACT FROM AUTHOR]

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.

This paper proposes a method for measuring the effects of substitutions in the timing of recreational use on people's willingness to pay for nonmarketed resources. Using the three markets (peak, pre-peak, and post-peak) for weekly rentals of vacation properties along the Outer Banks of North Carolina, we are able to control for changes in the mix of site characteristics selected at different times and estimate the effects of temporal substitution on tradeoffs between other characteristics. Proximity to the ocean was found to be a significant determinant of temporal substitution between the peak and pre-peak seasons with ocean front properties having 1.9% to 4.7% smaller discounts for pre-season rentals relative to other properties.
Economic policies are increasingly directing attention to the effects of stochastic externalities that cause short-term disruptions in the availability of services from environmental resources. When the effects are large or the resource sufficiently unique that the prospects for substituting other resources are small, changes in the timing of recreational usage becomes an important consideration. In some situations the external effects may not involve permanent losses and may allow use later within the same season. Our approach for evaluating the importance of commodity-specific rates of time preference suggests traditional models that rely on all commodities having an approximately comparable implicit rate-of-time preference (when considering substitution through time) may not be especially useful in understanding how people evaluate short-term temporal substitutions. [ABSTRACT FROM AUTHOR]

Abstract--As Hall (1988) notes, the magnitude of the intertemporal elasticity of substitution in consumption, sigma, is "one of the central questions of macroeconomics": Do higher expected real interest rates lead to deferred consumption? We extend Hall's methodology and model, and compare results for the United States and the United Kingdom. In both cases we directly estimate the moving average process which temporal aggregation might induce in the random disturbances, and take account of consumers who do not follow the life cycle--permanent income model of consumption. [ABSTRACT FROM AUTHOR]

Abstract--This paper presents microeconomic estimates of substitution possibilities between capital-intensive, solar-produced energy and conventional, nonrenewable energy sources, while examining the conditions under which recently enacted tax incentives designed to accelerate solar's market penetration could result in an increase, rather than a reduction, in the consumption of nonrenewable energy sources. The empirical results imply that such counter-productive outcomes are possible, given long-run elasticities of demand for energy services around -1.5. [ABSTRACT FROM AUTHOR]

The article focuses on the U.S., import competition from developed and developing countries. Competition from the U.S. industrialized trading partners seems to have intensified, and has invoked renewed protectionist pressures. From the perspective of the less developed countries (LDCs), the importance of the substitutability of their exports for the goods produced by the developed countries (DCs) is evident. In this article the author investigates the substitutability between imports from developed countries, imports from less developed countries, and home goods in the U.S. market for certain manufactures. The demand for imports from a given source is assumed to be a function of the price of that import good, the price of the similar import that originates in the alternative supply source, the price of the good produced by the U.S. industry, and a real actively variable. The article concludes that imports from both developed countries and LDCs are in most cases relatively close substitutes for domestically produced commodities, but quite imperfect substitutes for one another.

The ease with which energy may be substituted for other types of inputs is of great importance in predicting economic disruptions arising from energy shortages as well as the energy implications of public policy. Studies of energy substitution in the American economy have been done by Ernst Berndt and David Wood, by Ernst Berndt and Dale Jorgenson and by Robert Halvorsen and Jay Ford; and of the Canadian economy by Melvyn Fuss. It would be gratifying to say that these researchers all confirm one another, but this is not the case. The difference that has generated the greatest controversy is the relationship between capital and energy. In the papers by Berndt and Wood, and Berndt and Jorgenson, the cross-price elasticity of factor demand, is significantly negative, indicating that capital and energy are complements not substitutes. A careful reading of the article shows that the capital input is handled in very different ways. On the level of aggregate U.S. manufacturing a value-added approach to capital cost would be expected to show capital-energy substitutability, while a service-price approach to capital cost would show complementarity.

The article presents information on the alternative estimates of the elasticity of substitution. Econometric studies based on cross-sectional data have produced diverse values of the elasticity of substitution. This diversity of results has been explained partly by a variety of hypotheses. The main thrust of this article is to relax the assumption of constant commodity prices through the introduction of a non-perfectly competitive market structure that allows firms to exercise some degree of market power in setting their mark-up percentage. This led to the derivation of a computational formula that provides corrected values of the elasticity of substitution. The assumption of constant commodity prices across regions biases the estimated values of the elasticity of substitution. The empirical results reported in this article confirm the findings of earlier econometric studies that in most cases the two-digit manufacturing industries exhibit a production technology variety where our corrected estimates of the elasticity of substitution changed only slightly.

The article develops an intertemporal production model capable of being implemented econometrically and undertakes some initial testing of the model at the aggregate level on U.S. data. The Austrian approach to production theory provides a framework for treating intertemporal production problems that is quite different from contemporary methods. In the Austrian view, time and timing were the crucial aspects of production. The production model includes the well-known durable capital good model as the special case used in most empirical work. From the theoretical viewpoint, given the "complete" listing of goods in the input-output vectors, this model certainly serves as a sufficient description of the firm's technology. Different features of production induces intertemporal leads and lags with respect to those inputs and outputs that are marketed, and hence appear in empirically estimated production relations. Making certain assumptions about the nature of the lag distributions, a summary representation of the technology and some of its properties was developed.

A large number of econometric studies have focused on possibilities for capital-labor substitution in the U.S. manufacturing. The evidence, however, indicates substantial disagreement over the value of the elasticity of substitution. Studies based on cross-sectional data provide estimates which are quite close to unity, but time series studies generally report lower estimates. Furthermore, estimates of or seem to vary systematically with the choice of functional form. Regressions based on the marginal product of capital relation generally produce lower estimates than regressions based on the marginal product of labor relation. The presence of tax policies alters this service price. Tax rates on property and income reduce the after-tax rate of return, while investment tax credits and accelerated depreciation allowances reduce the net acquisition price of the asset. It might be reasonable to assume that at a particular point in time, effective tax rates and capital gains are equal across regions or states.

This article examines changes in the relative share of labor and capital in the Israeli agricultural sector. Over the 1952-1969 period the share of labor in agricultural value added has declined. It was 60% during 1952-1954 and dropped to 44% in 1967-1969. The quantity of labor measured in efficiency units is increased by more than that of capital, but labor can hardly be substituted for capital. Thus, finally, the marginal product of labor increases relatively less than that of capital. In a similar analysis for the manufacturing sector in Israel for the 1952-1969 period, it was elsewhere found that capital increased laster than labor, and that the growth of the wage bill in manufacturing is less than the growth of output; thus, in the manufacturing sector too, the share of labor in output is declining. The low measured elasticity of substitution between capital and labor in the Israeli agriculture might be explained by the high specificity of factors engaged in this sector and by governmental interventions in output and input allotments which are common to the Israeli economy.

The article presents a simple analysis of the substitution term in the theorem by Steffan Linder that deal with income distribution. Later the authors considered the income effect whose sign, as usual, is ambiguous. According to them in his illuminating book Linder dispels some common illusions about leisure and, in particular, the prediction that its growth will constitute an increasing social problem. His observations lead to quite a different view - that for substantial groups leisure is becoming scarcer. In this context the authors discuss the role of income effect in offsetting the substitution effect. This effect may seem to be more damaging than helpful to the Linder position. As a result the authors see an ambiguity of the sign of the income effect which increases the richness of Linder Theorem. But, it in turn indicates also that the activities that are often said to make for a gracious and rich existence i.e. music, the theater, the dance etc. are under simultaneous attack from various directions.

In this paper we argue that due to the presence of quasi-fixed overhead labour, the aggregate short-run production function of the industry has the property of bounded substitutability. That is, when employing overhead labour, the industry will only be able to earn a positive quasi-rent for a bounded interval of aggregate labour intensity. [ABSTRACT FROM AUTHOR]

In this paper an attempt is made to study the interaction process which occurs between petroleum products and the remainder of the fuel market. Petroleum competes with electricity, gas, and coal as a source of fuel and in this paper we wish to assess by studying the demand elasticities its place in the fuel market (See Stone, 1954; Pearce, 1964; Leser, 1969). In the U.K. fuel market the question is to what extent petroleum is a substitute or complement to these goods. There have, in fact, been no studies done on this. It appears from Table 1 that petroleum consumption constituted 25 per cent in 1960 of the total fuel consumption and it has grown constantly over the period. [ABSTRACT FROM AUTHOR]