The existence of factor substitution in the primary aluminium industry: A multivariate error-correction approach using Norwegian panel data |
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Authors: | Kjersti-Gro Lindquist |
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Affiliation: | 1. Statistics Norway, P.O.Box 8131 Dep., 0033, Oslo, Norway
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Abstract: | ![]() This paper presents an econometric analysis of factor demands in the Norwegian primary aluminium industry using annual plant-level panel data. The translog cost function approach is applied, and a multivariate error-correction model of the cost shares of labour, raw materials and electricity is estimated. Capital is assumed tobe quasi-fixed. The hypothesis of fixed input coefficients is rejected for this industry, but the estimated own-price and cross-price elasticities suggest that relative price variations have limited effect on conditional factor demands. |
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