Stephen G. Grubaugh, Andrew J. Stollar, G. Rodney Thompson, Socialist Structural Gaps: A Simultaneous Inference Analysis, The Review of Economics and Statistics, Vol. 71, No. 4 (Nov., 1989), pp. 693-698

The substitution of other factors, such as capital, labor, and materials for energy is a central issue in formulating energy policies. Models have been designed to determine the elasticity of substitution between these factors and how much government intervention is needed to commercialize new substitutions. Pooled cross-national time-series data for seven countries are used to estimate a translog cost function and price elasticities of substitution and demand. The intercountry differences are found to be small for the U.S., West Germany, and Japan. This indicates that pricing policies could play a major role in promoting energy conservation as U.S. industries shift to the technologies already employed by the other countries. 5 references.